Saturday, April 9, 2016

On Predicting the Future of Social Security

There are some "hard" sciences which rely on quantifiable data and experiments, and "soft" sciences that rely on more subjective data.  But in either case, science depends equally on data and theory.  And one of the benefits of science is that it allows us to make predictions about the future.

The Whig science of politics rests on data and theory.  The guiding theory of the Whigs has always been this: democratic forms of government are susceptible to corruption, and when a complacent public allows political leaders and members of wealthy elites to exchange money and influence amongst themselves, an oligarchy will emerge.  And an oligarchy is simply this: a handful of people who have money and influence set the political agenda, and their private interests supersede the interests of the majority of Americans.  Data in support of this theory aren't always conclusive, but it is in many cases strongly suggestive.

Morris Reid was a senior official in the Clinton administration
Among American Whigs, the theory of oligarchy goes back to John Adams, James Madison, Thomas Paine, Thomas Jefferson, and James Otis, among others.  I won’t expand on the historical references today.  It suffices to say that the Founders believed in the predictions generated by the Whig science of politics, and undertook the American Revolution not so much because of oppressions already in place, but because of further oppressions they saw looming on the horizon.
During the Bush years, Democrats knew who the "bad guys" were

The theory of oligarchy helps the scientist by identifying avenues of exploration.  Presently, I’d like to apply this theory to the empirical record surrounding Secretary Hillary Clinton, and I will make a prediction regarding the future of Social Security. 

Dewey Square Group

According to Source Watch, “The Dewey Square Group (DSG), founded in Boston in 1993, is a public affairs firm with specialties in ‘grassroots’ and ‘grasstops’ campaigns, strategic communications, coalition building, state and local affairs, international practice, and political campaigns ... In 2005, DSG had unaudited revenues of $12.5 million and gross assets of $2.9 million.”  Among its leaders are Jill Alper and Charles A. Baker III.  These names will become important momentarily.

In 2013, members of the Dewey Square Group visited Secretary Clinton to discuss her political plans.  She had not yet declared her intention to run for president.  They laid out a comprehensive, numbers-driven assessment of the amounts of money Mrs. Clinton would have to raise, how to put together field operations, and other pertinent information (Source).  


One of the leading policy objectives championed by the Dewey Square Group is the reduction of Social Security benefits (source).  This campaign is covert, and masquerades as an effort to raise public awareness of the dire consequences that will befall the nation if nothing is done about the federal deficit.  Mind you, there is no factual connection between Social Security expenditures and the deficit (or to be precise, if Social Security was administered the way it was intended, rather than being used as a “piggy bank” by our representatives in Washington, it would be a self-funding program – go here for more detail).  The point here is that the Dewey Square Group has settled on specious arguments about the federal deficit to justify targeting Social Security.  

There are obvious reasons why oligarchs wish to end or curtail Social Security.  Because employers are required to contribute 6% of employees’ wages to Social Security, Social Security makes American employees more expensive.  And although the oligarchs have succeeded brilliantly in removing jobs from the United States and setting up facilities in low-wage countries, there is still the hope that American labor can be had more cheaply.  The oligarchs openly admit that their plan is to systematically reduce American wages (source).  They can admit these things without fear of repercussion because Americans simply aren’t attuned to the relationship between their agenda and the agenda pursued by our representatives in Washington.  ALSO, the simplest solution to funding Social Security consists of eliminating current tax breaks enjoyed by the wealthiest Americans.

After Reagan's disastrous borrowing binge, our leaders began borrowing from Social Security

Secretary Clinton is closely associated with Dewey Square Group.  As already mentioned, their representatives helped her in planning her White House bid.  In addition, Jill Alper is one of those super-delegates who have agreed to support Clinton’s nomination regardless of whether or not Clinton receives the popular vote (as is Minyon Moore, another Dewey Square employee).  In 2015, Ms. Alper offered up her swank Grosse Pointe home and hosted a $2,700 per ticket fund-raising event for Secretary Clinton (source).  Charles Baker is Clinton's senior campaign strategist and chief administrative officer.  In turn, Secretary Clinton’s Super PACs Priorities USA Action and Correct the Record have paid considerable sums of money to Dewey Square for their services (source).  Dewey Square has also mobilized to oppose efforts to increase the minimum wage (source)

The Carlyle Group

Secretary Clinton’s generous compensation for giving talks at Goldman Sachs has received some attention, but she has also received money from the private equity firm the Carlyle Group (source).  Her husband Bill has also received speaking fees from this firm (source).  The Carlyle Group is also actively involved in lobbying for reductions to Social Security as well as Medicare (source).  Evan Bayh, a super-delegate in Clinton’s 2007 campaign, received considerable money from the Carlyle Group (source). 
The Blackstone Group

The assault on Social Security is spearheaded by Pete Peterson (source), a billionaire co-founder of the private equity firm called the Blackstone Group.  Super-delegates such as Chris Dodd has received money from the Blackstone Group (source).  The leadership of the Blackstone Group has thrown its support behind Secretary Clinton’s campaign (source).  

According to the International Business Times (12/16/15), "The president of Blackstone Group, Tony James, hosted a fundraiser for Clinton. The cash flowed to the Clinton campaign just two months after the private-equity giant settled with the Securities and Exchange Commission over charges that it used so-called monitoring fees to enrich the firm at the expense of investors. Clinton accepted the money from executives at the sanctioned firm even as she has criticized the Obama administration for not punishing the perpetrators of financial crime more strenuously (source)."

Ideology of the 1% 

Going beyond the argument that Social Security makes American labor more expensive, there is also an ideological objection to Social Security among the super-wealthy.  Super-wealthy individuals obviously do not pin their retirement hopes on Social Security and, from their egocentric perspective, regard the program as unnecessary. 
Social Security money was used to make the deficit appear smaller than it was
Paul Krugman (of all people) has noted that, “while most Americans love Social Security, the wealthy don’t. Two years ago a pioneering study of the policy preferences of the very wealthy found many contrasts with the views of the general public; as you might expect, the rich are politically different from you and me. But nowhere are they as different as they are on the matter of Social Security. By a very wide margin, ordinary Americans want to see Social Security expanded. But by an even wider margin, Americans in the top 1 percent want to see it cut (source).”  It has been empirically demonstrated that when the policy preferences of the 99% conflict with the preferences of the 1%, the latter usually come out victorious (source).  

Undermining Social Security has Already Been Attempted

In 2014, President Obama proposed a “chained CPI” formula for calculating Social Security benefits.  This would have had the effect of reducing benefits.  The plan was dropped in the midst of withering public opposition (source).  The idea of using chained CPI to cut costs was the brainchild of Erskine Bowles, who was once Secretary Clinton’s chief of staff (source).

President Clinton's "surplus" was an accounting trick learned from Bush I
One may reasonably conjecture that Secretary Clinton, who has lately come to embrace Obama’s approach to governance, will resurrect the issue in the name of her beloved Pragmatist philosophy.  She has already said: “I think that our rising debt levels poses a national security threat. And it poses a national security threat in two ways. It undermines our capacity to act in our own interests and it does constrain us, where constraint may be undesirable. And it also sends a message of weakness internationally (source).”  Clinton has positioned herself as a deficit hawk (source).  Also, defenders of Social Security have observed that her language regarding Social Security is evasive, and does not make a firm pledge not to cut benefits (source). 


Political leaders who receive money from Pete Peterson, Blackstone, or the Carlyle Group are in many cases outspoken critics of Social Security who make false claims about the program.  Admittedly, there are also recipients of money from these interests who are staunch defenders of Social SecurityIt is nonetheless reasonable to infer that donations are made in the hope of some return on investment, and it is clear that Peterson and the groups just mentioned have been committed foes of Social Security and will benefit financially from changes to Social Security that will adversely impact most Americans.  It is also clear that Blackstone, Dewey Square, and the Carlyle Group have made substantial investments in terms of time and money support of Secretary Clinton's presidential bid. 

The Democratic Leadership Council (DLC) -- a body of so-called "centrist" democrats -- was an incubator of policy positions that led to Bill Clinton's successful rise to the presidency.  As shown herethe DLC approach shaped Hillary Clinton's policy positions as well.  The DLC now goes under the name "Third Way" and in a major policy paper the organization has attacked Bernie Sanders for suggesting that Social Security ought to be expanded.  Third Way, and DLC before it, adopted a "pro-business" and "small government" stance in order to appeal to moneyed donors.  

The Prediction

Should Secretary Clinton become president, Social Security will become a prominent issue.  She will either resurrect chained CPI or take the ruinous step of proposing that Social Security become a “means-tested” program.  This would undermine the broad popular support that the program enjoys and transform it from social insurance to a welfare program (source source).  She might even have the chutzpah to propose using private investments to fund the program. 

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