(For previous posts about the oligarchy, see here.)
I have repeatedly said that progressives have to be most on the alert when Democrats are in power. It is under Democratic administrations that the oligarchy tries to achieve major goals because the party’s base, ever-vigilant to guard against encroachments when Republicans hold power, falls asleep when their own party is at the helm. We see Obama doing things in the name of national security that would have evoked howls of protest if Bush had done them. We see Obama treating Wall Street with a generosity that would be loudly protested if a Republican did it.
The big prize for the oligarchy is, of course, Social Security. The privatization of Social Security has been a long-cherished dream of Wall Street anxious to get their hands on that trillion-dollar account. In general, Republicans have been thwarted when they tried to do it. George W. Bush tried to privatize it in his second term but was beaten back and gave up on it. The Democratic Party has long been seen as the defenders of Social Security, which is why the oligarchy sees it as a better agent for achieving its goals.
It is not well known that Bill Clinton also secretly set in motion attempts to privatize (they use the euphemism ‘reform’ or ‘save’) Social Security, following his successful move to gut welfare programs for the poor. These secret plans were well advanced and getting down to the level of fine-tuning details in preparation for a public announcement. But as Robin Blackburn explains in this 2004 article, he was thwarted, not by the party’s base, but by the Monica Lewinsky scandal which forced him to appease his base in order to save his political skin.
We have this on the authority of high-ranking members of the Clinton Treasury who gathered in Harvard in the summer of 2001 to mull over the lessons of the 1990s. At that conclave it was revealed that on Clinton’s orders a top secret White House working party had been established to study in detail the basis for a bipartisan policy on Social Security that would splice individual accounts into the program. Such was the delicacy of this exercise that meetings of the group were flagged under the innocent rubric “Special Issues” on the White House agenda.
In the mid-1990s pessimism about the future of Social Security was rife in seminars, conferences, op-eds and learned papers by which elite consensus is fashioned. The media lent an eager ear to charlatanry from outfits like the Third Millennium, which ventriloquized a supposed consensus amongst youth that the program would not be there for them when they came to retire – and that consequently their best bet was to take their FICA payments and put them in a private share account in soar-away Wall Street.
Third Millennium was, of course, a front for the privatization lobby. But it did tap into a vein of public anxiety and skepticism concerning Social Security finances and, with the stock market soaring upward, its Wall Street connections were an asset not a liability.
But in 1998 the Lewinsky scandal burst upon the President, and as the months sped by and impeachment swelled from a remote specter to a looming reality, Clinton’s polls told him that his only hope was to nourish the widespread popular dislike for the hoity-toity elites intoning Clinton’s death warrant.
In an instant Clinton spun on the dime and became Social Security’s mighty champion, coining the slogan “Save Social Security First”.
In his 1999 State of the Union address Clinton seized the initiative from the privatizers with a bold new plan that gave substance to the “Save Social Security First” slogan. He proposed that 62 per cent of the budget surplus should be used to build up the Social Security trust fund. He promised to veto any attempt to divert Social Security funds to other uses, and he urged that 15 per cent of the trust fund should be invested in the stock market, not by individuals but by the Social Security Administration.
The first part of the plan to privatize Social Security, which has long been in evidence, is to soften up the public by persuading all people that the system is in dire crisis, and especially the young, that they are being ripped off because Social Security will not be there for them when they retire. This is a lie. There is no long-term problem with Social Security that cannot be fixed with minor tinkering within the system. This graph of the Social Security trustees projections of future financial status (as a percentage of GDP) shows that there are no runaway costs in Social Security in the foreseeable future and the gap between revenue and outlays can be easily closed. Furthermore, the current surplus in the trust fund (well over three trillion dollars) that has been built up over the years can be used to fund the deficit in the current account at least over the next two or three decades without any changes at all in the system.
The economic minds behind Clinton’s moves were Larry Summers and Gene Sperling, both of whom are now close Obama advisors. There is no doubt in my mind that Barack Obama also wants to raid Social Security in some way to benefit the oligarchy, to do what Clinton and Bush could not. His reduction of the payroll tax contribution and his adoption of the alarmist rhetoric about the need to ‘fix’ Social Security has laid the groundwork for meddling with it. You can be sure that his economic team is already working on it. The real question is when he will reveal the details of what he has in mind, whether he will keep his plans secret for longer or whether he will reveal at least part of it in this year’s State of the Union speech to be given this evening.
The cautious thing to do would be for Obama to wait until his second term, like Clinton and Bush, so that he does not have to worry about any negative impact on his re-election chances. But Obama seems to have an arrogant confidence about his ability to get his followers to rally behind him whatever he does, and he may well think that he can tackle Social Security now and escape unscathed.
And he will unless people protest loud and long. Monica Lewinsky played her part. Now it is up to the rest of us to save Social Security.
I am thinking that Social Security is not secure. It has become more of a carrot that is dangles for votes these days. If you care about your financial future invest your own money.