Pete Peterson's Anti-Entitlement Juggernaut Gets Fueled Up by Obama

| Wed Apr. 28, 2010 10:28 AM PDT

When Obama’s new Deficit Commission gets going, it has plans for "partnering“--in the words of executive director Bruce Reed--with outside groups. Among them will be the foundation run by Wall Street billionaire Peter G. Peterson, who on today is upstaging the president with his own fiscal summit in Washington. Obama insists he is keeping an open mind about how to deal with the deficit and national debt--but he’s already stacked his own commission with people who lean heavily toward one particular solution: cutting entitlements for the old, the sick, the disabled, and the poor. And if that wasn't enough, he now looks to be working hand-in-glove with a wealthy private organization whose central purpose is to cut Social Security and Medicare. Talk about foregone conclusions. 

The White House set the stage two months ago when it created the euphemistically named National Commission on Fiscal Responsibility and Reform--commonly called the Deficit Commission or the Debt Panel. The commission's anti-entitlement bent was clear from the get-go based on Obama’s choice of Alan Simpson to co-chair the commission. The former Republican senator from Wyoming has already described his mission as “saving” the United States from “insolvency” by hacking away at entitlements. His longstanding dedication to cutting entitlements dates back several decades, according to Saul Friedman, and "as recently as 2005, Simpson, a conservative from Wyoming who left the Senate in 1997, supported attempts by President George Bush to privatize Social Security by turning part of the pension and insurance program into millions of individual investment accounts, which by now would have lost 20 percent of their value." And even now, "Simpson, who should know better, conflates or deliberately confuses Social Security’s long term fiscal problems, which are minor, with its supposed contribution to the federal deficit, which is almost nil."

Known for his colorful language, Simpson recently attracted attention by saying old people ought to but out of the entitlement debate altogether, since any cuts would only apply to younger people: "You’ve got scrub out [of] the equation the AARP, the Committee for the Preservation of Social Security and Medicare, the Gray Panthers, the Pink Panther, the whatever." And in an interview with PBS's NewsHour after his appointment, Simpson clearly showed his hand on Social Security: “You have two [sic] choices…you either raise the payroll tax or decrease the benefits or start affluence testing. The rest of it is B.S. And if the people are really ingesting B.S. all day long, their grandchildren will be picking grit with the chickens. This country is gonna go to the bow-wows unless we deal with entitlements, Social Security and Medicare.”

But Simpson's power as chair of the presidential Deficit Commission pales in comparison to that of billionaire anti-entitlement crusader Pete Peterson. According to Forbes, Peterson was the 149th richest man in America last year, with $2.8 billion in assets. During his long career he has been, among other things, CEO of Bell & Howell,  head of Lehman Brothers, a co-founder of the Blackstone Group, and head of the Council on  Foreign Relations. He was Nixon’s Secretary of Commerce, and in 1994 served on a Clinton bipartisan commission on entitlements and tax reform. He launched his own Peter G. Peterson Foundation with a grant of $1 billion.  

A fiscal conservative, Peterson has long been issuing dire warnings about the the nation’s skyrocketing debt. The key cause of the problem, in his analysis, is that entitlement programs--primarily Social Security and Medicare, but Medicaid as well--are out of control; the only solution is to cut them. Peterson's longstanding attack on Social Security has been most extensively documented by William Greider in The Nation. At this point, Peterson has emerged as the self-appointed head of what some people have begun to call the “granny bashers,” who argue that greedy geezers are ruining the lives of younger generations with their unconscionable demands for basic healthcare and a hedge against destitution. (Peterson himself is in his eighties--but of course he’s too rich to worry about such things.)  

The granny bashers’ real agenda, of course, is to cut the social safety net programs that they have long abhorred--but they have gained far more ground with their intergenerational inequity claims than they ever would with a straight-out attack on Social Security and Medicare. The majority of the Washington punditry seem to have fallen for it--and so too, apparently, has the White House.

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A year ago in Newsweek, Peterson wrote: 

For the first time in my memory, the majority of the American people join me in believing that, on our current course, our children will not do as well as we have. For years, I have been saying that the American government, and America itself, has to change its spending and borrowing policies: the tens of trillions of dollars in unfunded entitlements and promises, the dangerous dependence on foreign capital, our pitiful level of savings, the metastasizing health-care costs, our energy gluttony. These structural deficits are unsustainable. Herb Stein, who served alongside me in the Nixon White House as chairman of the Council of Economic Advisers, once drily observed, “If your horse dies, I suggest you dismount.” And yet, we keep trying to ride this horse. 

In June, according to the Washington Post,  Obama’s deficit commission will be participating in a 20-city electronic town hall meeting, put together by an organization called America Speaks. It is financed by Peterson, along with the MacArthur Foundation and Kellogg Foundation. This is a truly unusual event because it marks the first time a presidential commission’s activities are financed by a private group that has long been lobbying the government on the very subjects the commission is supposed to “study.” 

Today's Peterson summit is crammed with luminaries in finance and government. First there’s the keynoter, Bill Clinton. Then there’s Alan Greenspan, the Federal Reserve chairman widely credited with getting us into our current economic mess, and Paul Volcker, his conservative predecessor at the Fed. Robert Rubin, Clinton’s secretary of the Treasury, and another pillar of the current economic debacle, will speak. So will Republican Congressman Paul Ryan, a leading GOP guru, who among other things wants to replace Medicare with a system of vouchers and tax breaks. Judd Gregg, the senior and probably most important conservative senator when it comes to finance, will be featured as well; he is a keen  proponent of Peterson’s entitlement cuts. 

The heavy hitters are all to be interviewed by big names in mainstream media: ABC’s George Stephanopolous will question his old boss Clinton; Leslie Stahl will speak with presidential commission co-chair Erskine Bowles, one of Clinton’s a White House chiefs of staff. Ranked below the big guys are a slew of lesser lights including some liberals like Lawrence Mischel of the Economic Policy Institute, Robert Greenstein of the Center for Budget and Policy Priorities, John Podesta of the Center for American Progress (and another former Clinton chief of staff), and former Congressional Budget Office head Alice Rivlin. 

All-in-all, it seems to be dominated by Clinton-era officials, who oversaw much of the Wall Street deregulation that nearly drove the country broke. These are the people who will now try to make up the losses on the backs of the poor and the old by rewriting the hard-won entitlement programs created during the New Deal and the War on Poverty. 

Meanwhile Obama--who seems to have learned nothing about strategy from the health care wars--will not say what he thinks about any of it. Instead, he prefers to sit on the sidelines and see what these people come up with--as if that horse wasn’t already out of the barn.

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