Yesterday Barack Obama signed the stimulus bill; today he’s visiting Arizona to unveil his $50 billion-or-so plan to help with distressed mortgages; and next week, the administration promises, he’ll execute an about-face and start talking fiscal responsibility for the long haul.
When he does, you’ll want to listen carefully to what he’s got to say about “entitlement reform,” because it may tell us a great deal about Obama’s view of the latest scheme for raiding the Social Security trust fund, one that’s far more deft and subtle than George W. Bush’s frontal attack.
The new campaign to hijack Social Security is the subject of William Greider’s cover story in this week’s issue of The Nation. It’s the brainchild of private equity eminence and former Nixon Commerce Secretary Pete Peterson, the Yoda-like prune of a man pictured above on the magazine’s cover. Peterson’s plan, which has the backing of a formidable part of institutional Washington DC, amounts to a more passive theft than the Bush proposal. You first have to understand that the government has been robbing the Social Security trust for years–that is, spending Social Security tax proceeds on the rest of the budget, to the tune of about $200 billion a year. So although Social Security now enjoys a theoretical surplus of $2.5 trillion, what it really possesses is that amount in IOUs. Peterson wants to take back the IOUs to offset the trillions in government bank bailout commitments the government has made and will make. If this project succeeds, Social Security is then well and truly broke, and politically it’s a short step from there to doing away with the program as we know it in the name of fiscal responsibility.
So read Greider’s story and keep an ear out for Obama’s fiscal discipline talk next week, because his position in this fight is one of the most important stands he’ll take in the next four years.