Yesterday, political leaders of both parties and media heavyweights convened to flatter and tout the preferences of one very influential man.
Meet Pete Peterson, the man who has made it a personal crusade to roll back decades of retirement security and induce panic about deficits and debt in Washington politicians. And when we say “made it a personal crusade,” we mean he’s invested in it to the tune of close to half a billion dollars, a new Huffington Post story reports.
According to a review of tax documents from 2007 through 2011, Peterson has personally contributed at least $458 million to the Peter G. Peterson Foundation to cast Social Security, Medicare, Medicaid and government spending as in a state of crisis, in desperate need of dramatic cuts. Peterson’s millions have done next to nothing to change public opinion: In survey after survey, Americans reject the idea of cutting Social Security and Medicare.
Like the Koch brothers and other billionaires, Peterson has invested big in order to shape the political debate and push his ideological agenda. In addition to his own institute, Peterson—who served as Secretary of Commerce under Nixon—endows scholars at other think tanks, supports curricula at colleges, and even funds a newspaper, the Fiscal Times, that has partnered with the Washington Post. At least in elite Washington circles, Peterson’s influence is far-reaching, as evidenced by the appearance of former President Clinton, the Treasury Secretary, the Speaker of the House and Budget Committee chairman Rep. Paul Ryan at yesterday’s event. Peterson-style policy preferences are the unspoken ideology of Washington conventional wisdom, including much of the press. These ideas dominate the conversation among the “serious” pundits and think-tankers who help set national policies.
Let’s step away from the catered lunches and carpeted conference rooms for a moment, though, and talk about what the rest of the country has to say. Social Security and Medicare are a big part of what allows seniors to have dignity and peace of mind in retirement, especially as private-sector pensions have eroded. Nearly 2/5 of all the income earned by seniors comes from Social Security; for a majority of seniors, Social Security represents 50% or more of their income. For a quarter of elderly couples and half of elderly single people, Social Security makes up 90% or more of their income—literally all that stands between them and severe poverty. Most Americans pay into these systems, and they’re the only guarantee of security and health care we have after we retire. And contrary to the talking points of Peterson-promoted, paid-for panic, Social Security and Medicare aren’t facing an imminent crisis.
Peterson—a billionaire—never has to worry about dignity in retirement, about choosing between food and medicine, about having to work even when your health won’t allow it. Nor do members of Congress with their taxpayer-funded pensions, or well-paid TV hosts, lobbyists and think-tank presidents. They also feel the pressure of paying into the system much less than the majority of working people, since they only pay Social Security tax on the first $110,100 of their income.
So here’s a modest proposal for Peterson and the networks that advance his message. You can raise the retirement age to whatever you want—as long as, at age 65, every think-tanker, pundit and politician who pushes the fake crisis gets to swap places with a 65-year-old nurse, truck driver, hotel housekeeper or drill-press operator. Sound good?
When one man loses $2 billion, it’s bound to attract attention. So it’s no surprise that the talk of the financial world is the ten-digit loss that hit investment firm JP Morgan Chase last week.
The best explanation of the complicated way that JP Morgan lost billions comes from Heidi Moore, the New York bureau chief for Marketplace. In short, the trader Bruno Iskil, operating with the support of JP Morgan management, made a very risky bet involving corporate bonds—and lost.
This bungled effort by JP Morgan is especially embarrassing because it comes only a few years after the collapse of risky bets in the housing market helped send the economy into free fall and set big banks rushing to taxpayers for bailouts.
Now the U.S. Senate is set to hold hearings into JP Morgan’s loss, and critics like Sheila Bair have asked if JP Morgan has become “too big to regulate.” Meanwhile, CEO Jamie Dimon continues to insist, as he has for years, that we don’t need rules to rein in Wall Street’s actions.
In a great interview, Moore explains why the JP Morgan story isn’t just about one big loss from one set of trades.
…What this tells us is that a lot of banks still haven’t learned how to measure and control the financial risks they’re taking when they make these bets and what’s dangerous about that is that now they’re doing that with our deposits — the deposits in the actual bank…
They take these big risks because they want the big revenues, they want Wall Street back the way that it was, but the way that it was is the wrong place to be. And there’s no acknowledgment of that yet.
Short-term profits and executive compensation were prioritized over stability before the 2008 crash, we now know; it seems as though Wall Street—which is even more consolidated into big institutions now—hasn’t learned anything from the consequences of its irresponsibility then.
There’s nothing wrong with having a healthy financial industry; indeed, at its best the industry serves a lot of important functions in the economy and helps people save for retirement, start businesses and buy homes. The problem comes in when, instead of serving the rest of the economy, the financial sector overtakes it. An under-regulated banking industry that puts itself at the center of the economy exposes the rest of us to the risks it takes. And when this industry takes up a disproportionate share of the economy, it also ends up with an outsized voice in the political process, making it harder and harder to rein in.
Unfortunately, the culture of Wall Street doesn’t just promote big risks and low accountability. It also promotes the idea that the financial sector should be the center of economic and political life—and, as numerous news stories have shown, top executives are almost childishly sensitive about the suggestion that their privilege is outsized.
The banking industry saw the last decade—a decade of light regulation, big profits, high compensation, and the increasing financialization of the economy—as a golden age. The big banks are spending a lot in the political arena to try and keep it that way. The JP Morgan losses are a hint that we shouldn’t let an unsustainable banking industry continue to run our economy.
…This isn’t just another blip in the news cycle. This is not the way pundits entertain themselves. This is a warning. It tells us that the machinery of finance isn’t quite working right.
The debt-ceiling deal and the Supercommittee were unnecessary exercises in political posturing, but they were also a game with real consequences for real people. Now the House Republicans have used the opportunity to push broad and devastating cuts to federal programs.
Yesterday, House Republicans pushed through (by a 218-199 vote) a bill to override the “sequester” in the debt ceiling deal and instead cut around $240 billion from domestic programs, with big impacts for the most vulnerable. Meant to replace the (smaller) defense cuts mandated by the debt ceiling deal, this bill really shows the House GOP’s priorities: they are 100% unwilling to ask anyone for any more tax revenue and deeply uninterested in maintaining programs that help keep families afloat and healthy.
Question: Are the House Republicans pursuing this ideological crusade in defiance of public opinion? Answer: Do you even have to ask? As Jonathan Bernstein notes, either they don’t believe what the polls say about what their constituents want, or they don’t care.
Instead, let’s talk about the things that would be cut under this bill:
• The American Community Survey, a part of the census which gives the largest-scale picture available of the what and where of poverty, housing and income.
• The Community Services Block Grant, a fund that support programs for children and seniors like foster care and Meals on Wheels.
• Food stamps, which would see 2 million lose their benefits entirely.
• Affordable Care Act subsidies, resulting in some 350,000 people losing coverage.
• Free and reduced-price school lunches.
We’ve said all along that there’s no reason for us to be here, except that congressional Republicans turned the routine debt-ceiling vote into a manufactured crisis. Now the House Republicans are trying to take advantage of that crisis to cripple our ability to help working-class people, retirees and kids. It’s appalling, but not surprising. We hope the Senate will refuse to join in with these devastating cuts.
David Waldman @KagroX Total cloture motions from World War I thru end of Reagan admin: 385. Total filed since Republicans lost the Senate in 2006 elections: 359.
Sen. Jon Kyl, a member of GOP leadership, announced last night that the GOP would prevent debate on the bill. They dislike that the bill is paid for by closing a corporate tax loophole, and want to pressure the Senate’s Democratic majority into accepting the House GOP’s version of the bill, which raids a preventative health care fund to cover the cost.
It’s a typical display of their priorities: any effort to get any more revenue from corporations is unconscionable to them, so they’d prefer to make us choose between lowering the cost of college and large-scale disease prevention efforts. Cutting from the public health prevention fund is a terrible idea for a lot of reasons, primarily because it’s a cost-effective program without high-paid lobbyists to support it.
Where is the public on this? They’d strongly prefer closing corporate tax loopholes:
A new National Journal poll asked specifically about the core dispute over the student loan extension, and 50 percent support the Dem approach of paying for it with tax hikes on some businesses. Only 34 percent support the GOP approach of paying for it out of a preventive health fund that’s part of Obamacare. Independents support the Dem approach by 49-31. And young voters — the same ones Romney keeps telling us should vote for him out of their own self-interest — support the Dem plan 58-28.
Not that this matters to the Senate GOP, as the fight over provisions of the American Jobs Act amply proves. They’ve shown an unprecedented willingness to use the filibuster not just in extreme circumstances but on almost every vote. This doesn’t just set a new 60-vote standard for anything to get done; it also chews up legislative time and causes confusion and frustration among voters. The simplest, most basic acts of governance become virtually impossible. And the consequences aren’t just political—in this case, they could cost future college students thousands of dollars in debt after they graduate.
So Republican obstruction and stubbornness wins out over both good policy and good politics, and the ability of a new class of students to afford college is again put in doubt. This might be a fun game for Sen. Kyl, but for families who want to send their kids to college, it’s not a game at all.
If you have the sneaking suspicion that there are a lot of politicians who aren’t too concerned about how the economy affects real people, you can find two great pieces of evidence today.
First, we head to the U.S. Senate, where Louisiana’s David Vitter is holding up nominees to the Federal Reserve, more or less just because he feels like it. Thanks to Vitter’s hold, the Democratic majority in the Senate can’t approve President Obama’s Fed nominees without getting past a filibuster. That has real consequences:
Leaving the central bank short-staffed deprives it of top-notch monetary policy and financial market expertise that could prove valuable given the stop-and-go nature of the U.S. recovery and economic threats coming from Europe.
It could also undermine the institution’s efforts to get up to speed on regulatory matters now that Congress has vastly expanded its responsibilities for ensuring financial stability.
The board has not been at its full seven-member strength since April 2006, and it could soon be depleted even further.
The Fed could, and should, be doing more to boost the economy, which is still in rough shape. Vitter is perfectly frank about the fact that he wants to prevent the Fed from engaging in the economy any more than it already is. By blocking the Fed nominees, Vitter gets two wins: he gets to frustrate and embarrass the President on policy, while the drag on the economy resulting from the Fed’s inability to act hurts the President politically. It’s a great deal for Vitter, but it works out terribly for the rest of us.
Next, we head to Loudon County, Virginia, where the county Board of Supervisors is poised to kill a major transit project. Washington Post columnist Steven Pearlstein aptly calls it “government by hijacking.” The project, an extension of the region’s Metro system to Dulles Airport, is a cooperative endeavor between federal, state and local governments. But the Loudon supervisors are angry that the rail extension might involve a project labor agreement with local unions (which makes sure that people working on the project get fair wages and benefits).
This decade-in-the-making project would create jobs and boost the local economy. Pearlstein notes that the rail extension was designed based on agreements on funding from governing bodies along the route—agreements that the Loudon supervisors are spiking because they don’t care for project labor agreements. The problem, Pearlstein says, is with “ideological zealots…who are constantly on the lookout for any opportunity to destroy the labor movement.”
In other words, the supervisors are willing to kill jobs and hurt property values for the people who elected them if it means they get to express their hatred of unions in the process. To be blunt about it, this is monumentally stupid, and shows a deep contempt for the people they represent.
We’ve seen this dynamic again and again—in the debt ceiling fight, the highway bill, the Consumer Financial Protection Board, the National Labor Relations Board, and more. Many Republican politicians are so hostile to the basic functions of governing that they’ll take actions that are directly harmful to the economy.
Maybe these politicians, whose salaries we pay, have the luxury of making ideological crusades and personal vendettas their top priority. The people we visit every day—people who are worried about keeping their jobs, staying in their homes, saving for retirement—aren’t so lucky.
