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This post was co-written by donnyg1941 and JeffreeB.

You may or may not have heard of Peter G. Peterson, but he has been trying very hard lately to make you believe your Social Security is in jeopardy. Peterson spent about half a billion dollars in 2011 alone to make sure that you feel that you are about to lose your "entitlements" and that we have to deal with this immediately.

So who is this mystery master of manipulation? Peterson has spent decades on Wall Street, amassing a net worth of nearly 3 billion dollars. He has spent some time in politics, serving under President Nixon as Secretary of Commerce. He also co-founded infamous private equity juggernaut Blackstone Group. Sounds like your typical fat cat, right?

Not exactly. While most of Peterson's cronies make no bones about their right-wing politics, Peterson really wants you to think of him as nonpartisan. Peterson is definitely a conservative, but through his billion-dollar-endowed Peter G. Peterson Foundation, he has made a gargantuan effort to present himself as a friend of both sides of the aisle. Peterson has given grants to conservative think tanks such as the Heritage Foundation and the American Enterprise Institute. But he has also given grants to the likes of the liberal Economic Policy Institute, and Peterson's foundation has brought the likes of Bill Clinton to its fiscal summit.

By attempting to present himself as nonpartisan, Peterson has been able to set our nation's agenda. Both Democratic and Republican politicians are being told by their sources of information that Social Security needs reform, so social security reform has, of course, become a big political issue. Peterson isn't exactly throwing handfuls of money at grantees and yelling, "Tell everyone we have to reform Social Security!" But he is making his priorities our priorities. As Michael Hiltzik puts it in his article "Unmasking the most influentialbillionaire in U.S. politics," "Peterson's influence in national politics stems largely from his ability to make his interests appear eclectic and nonpartisan." Peterson declined Hiltzik's interview request for the article.

One of Peterson's latest projects, the bipartisan Fix the Debt campaign, is spending millions to convince us all we need to take one for the team if we want to save Social Security. Fix the Debt proposes a gradual COLA decrease, as well as an increase in retirement age to 69 years old. Mitt Romney, by the way, champions this plan.

This sounds like a reasonable sacrifice to save Social Security, right? After all, if we don't do something now, we're going to lose it, right? Wrong. As of 2011, the Social Security Trust Fund had a surplus of $2.7 trillion. The Social Security Board of Trustees states that the fund will not be exhausted until 2033. And at that point, Social Security recipients will still receive 75% of expected benefits. But thanks to the efforts of Peter Peterson, we talk about Social Security as if we are going to lose it tomorrow. If you ask Peterson, the sky is indeed falling.

Do our "entitlement" programs need reform? Yes. If we continue our present course, we will run into trouble in a couple of decades. Is Social Security circling the drain as we speak? No. But Peterson wants you to think it is. If we believe this, we are much more likely to accept losing some of the benefits of the system we pay into every working year of our lives.

What we don't talk much about, though, is an alternative. Right now the Social Security payroll tax cap is set at $110,100, meaning that any yearly income earned above this is not taxed for Social Security. Next year this figure will increase to $113,700. But lifting the payroll tax cap altogether would yield over $100 billion more per year for Social Security. And the only Americans affected by removing the cap would be those making over $110,000 per year. If you're making less than that, your entire income is subject to the payroll tax, anyway.

So should we all listen to Chicken Little Peterson and retire later and get less back from the system into which we ourselves pay (and into which Peterson and friends pay a fraction of a fraction of their income)? Or should all Americans pay their fair share of payroll tax? The answer seems pretty clear.

Note: JeffreeB will be available immediately after publication for comment.
This entry is also available on firedoglake.

Originally posted to donnyg1941 on Tue Oct 23, 2012 at 10:28 AM PDT.

Also republished by Social Security Defenders.

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Comment Preferences

  •  Tip Jar (6+ / 0-)

    Heist! how major US corporations orchestrated the greatest theft in history. follow @PolicyMavenMD

    by donnyg1941 on Tue Oct 23, 2012 at 10:28:26 AM PDT

  •  What do you think, folks? (1+ / 0-)
    Recommended by:
    Sylv

    Should we take the hit to keep Social Security going past 2033, or should we make the wealthy pay their fair share?

  •  It is not limited to Peterson (2+ / 0-)
    Recommended by:
    tardis10, chuckvw

    Many Democrats are on board and many others absolutely refuse to take a stand on the horrific COLA cuts and increases in eligibility age.  When you add in the potential cuts to Medicare it is terrifying.  If you cannot tell me where you stand you will not get my vote.

    •  Exactly (0+ / 0-)

      Right. This is an idea embraced by many on both sides of the aisle, even though making those who can least afford it take the hit doesn't sound like something for which a democrat would want to admit he/she stands. And that is where, even though some say Peterson has been totally ineffective in his efforts, Peterson's plan has really come together.

      •  With the exception of Biden's off the cuff (1+ / 0-)
        Recommended by:
        Bruce Webb

        Support for current Social Security recipients - which was scaled back - there has been zero commitment to current benefits.  Dodging, weaving, evasions, and abstract statements of support for the programs is all.  

  •  donny - eliminating the SocSec cap (2+ / 0-)
    Recommended by:
    nextstep, chuckvw

    could end Social Security as we know it.

    Your proposal for SocSec could end the program as it was intended and has operated to this point. It was designed as "wage insurance" with its own funding mechanism and not funded by general tax revenue. It is not an income redistribution plan, but rather a program where people earn a benefit by the contributions they make into the system, as well as their employers. There is a reason why there is a cap. The thought is that people at higher incomes likely have other retirement assets and don't need to "insure" all of their income. Investment income isn't included because investment income isn't tied to employment and doesn't end when we retire. Therefore, there is no logic to "insure" it. There are two issues with eliminating the cap, one is that if all the extra income is included the benefit formula, SocSec payments to very high income earners could be six figures per year. If you take the cap off of contributions, and cap the benefits, you have changed SocSec as we know it and violated every principal that FDR set out for it when it was started. The program shares such bipartisan support because people think it is fair and your benefits are tied to your contributions. That link cannot be broken or you have an income redistribution program that FDR warned us would be perceived as welfare, he called it the "dole".

    I favor raising the cap, and allowing benefits to rise to reflect the higher contributions. A staged increase in the cap solves nearly all of SocSec's financial problems.

    "let's talk about that"

    by VClib on Tue Oct 23, 2012 at 10:52:10 AM PDT

    •  Great points (1+ / 0-)
      Recommended by:
      VClib

      I think these are great points, and we would definitely have to take a close look at what would happen if we removed the cap or just raised it.

      Unfortunately, it seems that not many want to have that conversation. We are so entrenched in "We've got to raise the retirement age and reduce the COLA now or we're going to lose Social Security!" that not enough attention is paid to any alternative.

      •  JeffreeB - I don't have the data to do the math (2+ / 0-)
        Recommended by:
        el dorado gal, nextstep

        But I believe that if we raised the cap to $200,000, in stair steps, over the next ten years we would not have to increase the retirement age or lower benefits. I also think that the people contributing at those higher levels wouldn't mind a SocSec benefit of $4,000 - 5,000/month, even if they have other retirement assets.

        "let's talk about that"

        by VClib on Tue Oct 23, 2012 at 11:14:48 AM PDT

        [ Parent ]

        •  Another alternative that balances SS (1+ / 0-)
          Recommended by:
          VClib

          The starting benefit has an unusual inflation adjustment for finding the current value of past contributions.  Instead of using some form of inflation price index, it uses an average wage index.  This results in a higher valuation than a CPI adjustment. Once a person collects SS benefits, the inflation adjustment is based on CPI.

          Proposals have been floated to continue the current calculation for the initial benefit for those who earned lower wages but use a calculation closer to a CPI adjustment for those who earned the SS max incomes  - and have a mix for those who earned in-between.

          This change does not impact those already on SS and those with lower incomes.  It puts the burden on those who had incomes closer to the max income under SS.

          The most important way to protect the environment is not to have more than one child.

          by nextstep on Tue Oct 23, 2012 at 11:43:48 AM PDT

          [ Parent ]

    •  I understand why you feel that way (0+ / 0-)

      but I disagree. Nowhere else in the world is this funded regressively.

      •  AQ - I think FDR had it right (0+ / 0-)

        that if SocSec was an earned benefit that paid a monthly amount based on the contributions by you and your employers, that it would develop strong bi-partisan support. While progressives would like to turn SocSec into an income redistribution program, and I certainly understand the appeal and basis for that given the income inequality we currently have, I think it is a very risky public policy position that would put SocSec at risk.

        "let's talk about that"

        by VClib on Tue Oct 23, 2012 at 11:42:52 AM PDT

        [ Parent ]

  •  Why? (2+ / 0-)
    Recommended by:
    daysey, el dorado gal

    SSA's own website says that to raise the payroll deduction by only 2% it would "save" Social Security.

    Why does nobody seem to sell this solution. I'd gladly pay less than the cost of a pizza per pay period to insure it was solvent. I'm old enough it WILL be there for me even if nothing is done but I'd like to see it be OK for the kids just like we did in 86.

    •  Peterson has set the agenda (0+ / 0-)

      Right, we don't get to hear other solutions. The agenda has been set by Peterson so that both Democrats and Republicans both believe that there is only one choice: Cut benefits or else...

    •  WHY!!! (0+ / 0-)

      Is the question for sure.  WHY is there no passion for maintaining the benefits?  I've read BS could reduce real benefits to $9K.  If you buy in to increasingly impactful cuts you destroy the program to "save" it.

    •  These old men have been trying to get their (1+ / 0-)
      Recommended by:
      chuckvw

      hands on the vast treasury of SS for a looong time. If they can "privatize" it , they will have it in their greedy wrinkled hands and it will disappear from our accounts to theirs. The good news is they are really old and won't be here much longer. My ? is why are they wasting the last moments of  their lives here trying to gain more wealth and power, if at their age they still think thats important their lives amount to nothing and they probably never had a moment of true happiness.
      I'm old too and want the kids to have theirs but also know these old bastards (Peterson, Adelson, Murdoch, Rumsfeld. Cheney etc) are miserable, I say throw their age in their faces (maybe that will wake them up)and continue to show them the better world you kids are bringing and that their world is dying. Thanx for letting me rant

  •  This reminds me of questions on the LSAT. (0+ / 0-)

    The LSAT, the test required of law school applicants, tests your understanding of arguments. I could see Peterson's argument as the basis of an LSAT question.

    Which of the following does NOT point out a flaw in the author's reasoning?
    (A) It tries to scare the audience rather than address the issue at hand.
    (B) It treats a possible solution of a problem as the only possible solution.
    (C) It treats something that could happen as something that will definitely happen.
    (D) It rejects out of hand plausible solutions to the problem it cites.
    (E) It assumes that merely because something has broad support, it should be done.
    OK, so the LSAT would never ask this particular question—since all five of them are flaws. :-)

    We don't want our country back, we want our country FORWARD. --Eclectablog

    by Samer on Tue Oct 23, 2012 at 10:56:54 AM PDT

  •  More than a quarter of a million people (1+ / 0-)
    Recommended by:
    chuckvw

    could have eaten well with what he spent.

  •  The social security trust fund is an accounting (1+ / 0-)
    Recommended by:
    chuckvw

    gimmick. The United States Government is the issuer of a sovereign, non convertible currency. By definition, it cannot become insolvent or bankrupt. Our government can default on its obligations, but only by an act of congress, or a congressional failure to act.

    Whenever you hear anybody clutching their pearls about how "America is running out of money" or "America is going bankrupt", your instant response should be "STFU - go learn about basic economics and money!" And this includes the huge number of idiots on our own side - our deficit doves like Stiglitz and Krugman. They fall well short of reality, but at least their misplaced deficit worries are not considered urgent.  

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