Readers of Unsilent Generation may be interested in a new online petition directed at members of Congress, concerning the work of the National Commission on Fiscal Responsibility of Reform, which I’ve written about here many times before. Here is the introduction to the petition, which was started by Alternet. You can read the text of the petition, and sign it, here at Change.org.
Right-Wing “Deficit Hawks” and their enablers are on a march to destroy the social safety net we built for our seniors and retirees. Shockingly, some of the most notorious advocates are actually in charge of the presidential commission that will soon determine the future of Social Security and Medicare. We need to stop them in their tracks! Join us in calling on Congress to Stop the Catfood Commission.
The National Commission on Fiscal Responsibility and Reform has been dubbed by progressives the “Catfood Commission” because its goal appears to be cutting benefits so drastically that retirees will only be able to afford to eat pet food. It’s hard to tell exactly what the commission is planning because its meetings are closed to the public and the press. Based on past statements and the background of its members the proposals are likely to include raising the retirement age to 70, turning large portions of Social Security over to Wall Street, and cutting Medicare benefits.
The commission’s co-chairman Alan Simpson, a former Republican senator from Wyoming, has stated he believes the founders of the Social Security program never expected anyone to actually live to 65 and collect. “People just died,” he has said. “Social Security was never [for] retirement.” Erskine Bowles, the other co-chairman, negotiated a secret but ultimately unsuccessful deal between Bill Clinton and Newt Gingrich to cut Social Security benefits. Any chances that the commission would make cuts to the US defense budget in its pursuit of fiscal responsibility seem slim owing to the fact that the CEO of Honeywell, a major defense contractor, is a member of the panel.
We can’t sit back and count on a Democratic-controlled Congress to protect our social safety net. Just a day before the July 4th holiday weekend, the House of Representatives passed a measure that would guarantee an up-or-down vote on the Catfood Commission’s recommendations in the current session of Congress if they pass the Senate. With this measure House Speaker Nancy Pelosi relinquished her power to prevent the vote from coming to the floor.
Your representatives need to hear from you NOW. Let’s stop the Catfood Commission from raiding the Social Security trust fund and slashing medical benefits for current and future retirees.
As Congress debates its tepid “reforms” of the financial industry, Wall Street has invaded Capitol Hill in what CNN described as a “lobbyists swarm.” What I know about the legislation gives me absolutely no confidence that it will make the market a safe place to put my retirement savings–or what’s left of them, after the recession. Seniors have already suffered most from the 401K long con, and the thought of getting anywhere near Wall Street makes me sick to my stomach.
Given how much money many elders have lost, I suspect those of us lucky enough to own homes that aren’t already mortgaged to the hilt are thinking about a “reverse mortgage” as a means toward future security. I know I’m seeing more and more ads where smiling oldsters talk about how their reverse mortgage took a load off their minds. This, of course, makes me highly suspicious; it all sounds too much like yet another con, replete with hidden fees and rip-offs, just like everything else the banking industry has come up with.
Fortunately, Saul Friedman recently wrote a comprehensive report on reverse mortgages. A former reporter for the Detroit Free Press, Friedman writes the ”Gray Matters” column that used to run in Newsday and now appears on the excellent blog about aging called Time Goes By. Friedman, whose judgement I trust completely, has a reverse mortgage himself; he has investigated the hidden pitfalls of this type of financing, and also knows that it matter what kind of reverse mortgage you get.
So here’s some welcome news for older Americans who own their homes and can use some extra income and cash. The up-front costs for many FHA-guaranteed reverse mortgages have gone down, which means the possible proceeds will go up by as much as $10,000.
I’m referring to the most popular and safest reverse mortgage, the Home Equity Conversion Mortgage, fondly known as the HECM. It is the safest for the lender as well as the homeowner-borrower because it is backed, insured by the Federal Housing Administration which has never defaulted on a mortgage that it has guaranteed.
Indeed, of all the mortgages that have fallen on hard times, or have been the subject of scandalous behavior by bankers and investors, the HECM has been largely untouched by these troubles. Last year, the Department of Housing and Urban Development raised to $625,000 the value of a home that could qualify for a HECM.
There’s much, much more to Friedman’s piece, which needs to be read in full. But here’s his summing up:
All in all, then, HECMs are a good deal if you intend to remain in your home for at least five years; otherwise you’ll be saddled with the closing costs that will eat up the proceeds you get.
To sum up HUD’s guide to HECMs:
You must occupy your home (condo, or co-op) as your principal residence
There are no income, credit or health requirements
Social Security and Medicare benefits are not affected
You keep title and may sell it at any time
You may use HECM proceeds to buy a second, vacation home as long as the loan on the first home is paid
And of course, no repayments as long as you occupy the home.
Still it would be wise to shop for a provider who may be able to arrange the loan and lead you through the process. HUD requires that each borrower undergo counseling by an approved agency (cost is $125). The counseling of the National Council on Aging, is even better and free. Call 800-510-0301.
“What’s been made clear from this disaster is that for years the oil and gas industry has leveraged such power that they have effectively been allowed to regulate themselves,” President Obama said last week in his press conference on the BP oil spill. “I was wrong,” he declared, “in my belief that the oil companies had their act together when it came to worst-case scenarios.”
Ya think? If this isn’t a textbook example of closing the barn door after the horse is out, I don’t know what is. In fact, it isn’t even closing the door so much as acknowledging that the barn actually has a door, which we might want to consider using once in a while if we don’t want the horses running wild. What the President’s statement reminds me of most is Alan Greenspan’s admission, after the economic meltdown took place, that there just might be a tiny ”flaw” in his approach to financial regulation. “I made a mistake,” Greenspan told Congress in October 2008, “in presuming that the self-interests of organizations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms.”
In the aftermath of his press conference, political pundits seem to be focused on whether Obama–and by implication the federal government–was taking too much responsibility for the spill, or not enough. Only a few have pointed out the patent absurdity of believing in the first place that the oil companies could be trusted to “have their act together” when it came to either preventing or dealing with massive spills. The history of global oil spills over the last half-century shows a pattern of carelessness and ineptitude on the part of the industry–and of failure on the part of governments who tried to intervene after the fact.
When the tanker Torrey Canyon drove straight into the rocks off Land’s End in Britain in 1967, spilling its 31-million-gallon cargo, chemical dispersants were spread on the expanding slick with no result. According to the “Report to the Committee of Scientists on the Scientific and Technological Aspects of the Torrey Canyon Disaster,” the British Air Force was called in to set the oil afire by bombing it. Some of it eventually caught fire; most of it did not. A Dutch salvage team thought they could fix things by pulling the ship off the rocks, but the tow cable broke. The spill ended up killing marine life and spreading glop all over the beaches of Southern England and some in France as well.
In 1969, a well on the outercontinental shelf six miles off Santa Barbara, California, went out of control. All initial efforts to control the spilling oil were as futile. When the flow was finally stopped after 11 days, 3 million gallons had escaped and coated the pristine beaches of Santa Barbara channel. (At the time it was considered a devastating disaster, and helped fuel the fledgling environmental movement in California–though the numbers sound almost quaint compared with the current BP spill.) After the Santa Barbara spill, the U.S. government came up with a plan to keep teams of experts from different parts of government on standby, so they could fly in and assess damage in the event of a spill.
In 1969 alone, the Coast Guard was reporting 1,007 oil spills in U.S. coastal waters. Many others were not reported. (It was standard practice for ships to pump waste oil into the water on approaching port.) That same year, a Woods Hole Oceangraphic research project in the Sargasso Sea, reported “quantities of oil-tar lumps up to 3 inches in diameter were caught in the nets…It was estimated that there was three times as much tar-like material as Sargasso weed. Similar occurrences have been reported worldwide by observers from this as well as other institutions.’’
In 1970 an Onassis tanker called the Arrow hit Cerberus Rock off Nova Scotia. It was the Torrey Canyon all over again. Detergents were sprayed with no effect. The U.S. Army dispatched teams armed with flame throwers to burn it up, which didn’t work. Chemists from Pittsburgh Corning Glass arrived with bags of little glass balls intended to act as wicks for burning the oil, but these did not ignite. Fiberglass collars set up to keep the spreading oil out of a fish processing plant also failed. Attempts to pull the ship off the rocks were futile. Eventually a gale broke the tanker’s back and the stern sank in one hundred feet of water with one million gallons of congealed crude oil aboard. In this case, by pure luck, the remaining oil stayed inside the tanker until a salvage team pumped it out a few months later.
In 1979, Pemex’s Ixtac oil well, in the Gulf off of Campeche, Mexico, suffered a blowout. Through various measures–some of them similar to those currently being used on the Deepwater Horizon spill–the flow of oil from the blown well was slowed from 30,000 to 10,000 barrels a day, but it took nearly ten months for it to be stopped completely. By that time, an estimated 3 million barrels had reached the U.S. Gulf coast.
The 1970s through the 1990s saw more than a dozen spills larger than the Exxon Valdez, pouring oil into the waters off Trinidad, Uzbekistan, Iran, Angola, South Africa, France, Italy, Greece, Spain, Portugal, Turkey, Ireland, Scotland, Wales, Mozambique, Chile, and Sweden.
As for the Valdez disaster itself, its effects still linger nearly two decades after the 1989 spill. During that time, suits against Exxon made their way through courts, resulting in a $5.5 billion jury trial settlement. But the Supreme Court later thought this was too much money, and cut the settlement to $1 billion. No fine ever levied against the oil industry has seriously inhibited its ability to keep doing business as usual–or employing lobbyists, or making campaign contributions. And to my knowledge, no oil company executives have ever gone to jail for the environmental devastation caused by their negligence or greed.
This, perhaps, is the real lesson of history when it comes to oil spills: It isn’t enough, even, to close the barn door, if you allow the horses to keep making hay.
Photo: Eisenhower National Historic Site, National Park Service
On June 5, 1944, the eve of the largest invasion in history, General Dwight Eisenhower visited the English airfield where paratroopers were preparing to take off for their drop into France. “Quit worrying, General,” one of the soldiers told him. “We’ll take care of this thing for you.’’ The following day, 175,000 men landed on the beaches and fields of Normandy.
For children growing up in Washington, D.C., shushed into silence behind the blackout curtains while our parents bent over radios bringing the long-awaited announcement of the attack, it was all beyond comprehension–save that every little boy was climbing into a tree to pretend he was flying his Spitfire over the Channel, or parachuting into the French countryside.
At age seven, I was one of those boys. Last week I had the good fortune to meet another member of my generation, whose experience of D-Day was something quite different. His name is Pierre Bernard, and he is retired to his family’s farm in the village of Maisons, a stone’s throw from the beaches that became the site of what the French call the Débarquement. In the spring of 1944, Pierre was twelve; with his parents and siblings, he worked the farm and waited for the Allied troops to arrive and free them from Nazi occupation. When that day finally came, Pierre recalls, the Germans simply vanished. British and then American troops soon passed through the village, moving quickly inland. His family was luckier than many others: Some 12,000 French civilians were killed during the battle for Normandy, along with more than 75,000 troops on both sides.
Today, long retired from his job as a cook in Paris, Pierre oversees a bed and breakfast in his old stone farmhouse. He’s never learned to use a computer, so his daughters help arrange who is to come, while Pierre, along with his two dogs, goes out each morning to bring back fresh baguettes and croissants. He serves them along with the jams and pates he makes himself, and sits quietly at the head of the family table, contentedly watching his guests eat breakfast. And he’ll gladly trade war stories with a visitor who, like himself, is too young to have fought, but old enough to remember.
Normandy today still inspires awe at the courage of the men who stormed Fortress Europe: Omaha Beach, so wide and unprotected; the cliffs of Point du Hoc, higher and steeper than I could have imagined. But by now, the genuine remnants of the war—half-buried German bunkers, wrecked ships, and thousands of well-tended graves—are outnumbered by nostalgic renderings of the real thing: Army surplus stores are filled with Eisenhower jackets, berets, and rucksacks (many of them supplied by German companies). Towns compete for tourists–and a place in history—with tanks on their village squares and little museums dedicated to every aspect of “Jour J.” In Sainte-Mère-Église, where an American paratrooper famously got caught on the church steeple, a dummy is suspended from a parachute to commemmorate the event. Then there are the British and American visitors tearing around in rented World War II jeeps, windshields down, and even a half-ton olive drab truck. They look far too young to be veterans; too young even to have been alive at the time. The men and women who fought that war are fast disappearing (some 850 U.S. WW II vets die every day, according to the VA), and those who lived through it as children are now well into our old age.
I was struck by how different Pierre’s old age in France is from mine in the United States—not because of anything that happened during the war, but because of what happened afterwards. In the postwar years, along with most other European countries (victors and vanquished alike), France implemented guaranteed pensions as well as national health care. Under a social welfare system that epitomizes what’s derisively referred to in the U.S. as the “Nanny State,” the average worker in France retires at age 60 on a full pension with complete medical care and various tax breaks. (And that’s after years of working 35-hour weeks, with two-month vacations.)
And what about aging Americans–including the waning ranks of the “greatest generation” that came before mine, who helped free the French and the rest of Europe, and then financed the continent’s recovery through the Marshall Plan? What can we expect? The most minimal of public pension systems, which was created before the war and has been under attack ever since; a private pension system that is now a shell of collapsing structures; personal savings decimated by Wall Street; and a partial and increasingly expensive health care system. More and more of us plan to work quite literally until we die–that is, if we can manage to keep our jobs, since we have little protection against age discrimination and no job security of any sort. In America, the war fought by “Citizen Soldiers” made our world all too safe for wealth and corporate power, often at the expense of the very men and women who won it.
In France, conservative President Nicolas Sarkozy has been chipping away at the Nanny State. His latest scheme—to raise the retirement age to 62—brought mass demonstrations across the country last week, and threats from the still-powerful unions. But even if Sarkozy’s latest initiative succeeds, as it well may, France’s elders will still be better off than their American counterparts have ever been.
Here in the U.S., we face a political juggernaut—most recently manifested in Obama’s “debt commission”–intent on cutting Social Security benefits, raising the costs of Medicare, extending the formal retirement age from 65 to 67 and beyond, and further tying our retirement and that of future generations to the vicissitudes of the securities markets through 401Ks and IRAs. Few voices are raised in protest against this attack on old-age entitlements. In fact, it seems to be one of the only true examples of bipartisanship in American politics, now that the Democratic Party, which once fought to build what social safety net we have, has collapsed into the arms of Wall Street. I expect it will progress with no more difficulty than “welfare reform,” in which another Democratic administration gutted our meager provisons for the poor.
In a Washington Post op-ed last Sunday, American Enterprise Institute president Arthur C. Brooks declared that “America’s new culture war” is a “struggle between two competing visions of the country’s future. In one, America will continue to be an exceptional nation organized around the principles of free enterprise–limited government, a reliance on entrepreneurship and rewards determined by market forces. In the other, America will move toward European-style statism grounded in expanding bureaucracies, a managed economy and large-scale income redistribution.” If only this were remotely true. In fact, that battle was lost long ago—if it was ever fought at all.
Perhaps I only imagine that Pierre’s life is more tranquil than mine because he enjoys the security that comes with “European-style statism,” while my own well-being remains “determined by market forces.” But I don’t think so. Sixty-six years ago, as a small boy playing pilot in the lush green trees of a Washington spring, I could not have guessed that Pierre, waiting in his farmhouse nestled in the hedgerows of Normandy for the jeeps and tanks of the First Army, would someday become a symbol not only of my country’s greatest victory, but of its saddest defeat.
For the last decade, BP has been busily engaged in a multi-million dollar greenwashing campaign. Changing its name from British Petroleum to just BP, the company adopted a new slogan, “Beyond Petroleum,” and began a “rebranding” effort to depict itself as a public-spirited, environmentally sensitive, green energy enterprise, the very model of 21st century corporate responsibility.
It’s going to take more than a name change and a clever ad campaign to erase the image of oil spreading across the Gulf Coast from BP’s offshore rig, and dead wildlife washing up onto its beaches. Even as it magnanimously agreed to cover the costs of cleaning up the mammoth spill, BP on Monday was still insisting that it wasn’t at fault for the accident that caused it–blaming it instead on the offshore drilling contractor that operated the rig, which exploded and then collapsed. So much for corporate responsibility.
Even before the Deepwater Horizon disaster, BP’s green image was nothing more than a scam. While making miniscule investments in things like solar power, biofuels, and carbon fuel cells that backed its PR claims, BP continued to work relentlessly to expand its oil and gas operations. In the last decade, the world’s second largest producer of fossil fuels, the company drilled (and spilled) vast quantities of oil and gas on Alaska’s North Slope and in the North Sea. It positioned itself to rip up Canada’s tar sands to extract its dirty oil, and grabbed a 50 percent interest in Iraq’s rich Rumaila oil field. BP boasted the highest number of explosions and other accidents at its U.S. refineries (several of them deadly), and made the Multinational Monitor’s 10 Worst Companies lists in 2000 and 2005, based on its environmental and human rights record.
But BP clearly believed that green was in the eye of the beholder. The company’s move toward green marketing began in 1997, when it quit the industry’s climate change denial group, the Global Climate Coalition, and acknowledged a possible link between global warming and the use of fossil fuels. By 2000, the vertically integrated multinational—which explores, extracts, transports, refines, and sell fuels through its myriad gas stations–had bought up Amoco, Arco, and Burmah Castrol. It united them under the BP brand with a feel-good flowering sun logo, and hired the advertising firm of Ogilvy & Mathers to launch a $200 million rebranding campaign.
As Ogilvy executive John Seifert described it in 2002, then BP CEO John Browne—or, to use his full title, Lord Browne of Madingley–“came to me with a dream proposal. He said, ‘I want this company to be a force for good in this world. Build that image and I will hold the company accountable to it,’” The problem, Seifert said, was, “No other industry is more loathed and distrusted by the public than the energy industry, and yet no other industry is more critical to modern survival. The reality is that no matter how much consumers resent energy companies, they still drive their cars and leave on the lights and turn the other cheek.” His solution was a campaign that “bridges the us/them barrier, that brings the consumer into the debate so that we can address the problem together.”
By 2004, BP was running its “BP on the Street” nationwide ad campaign, featuring of what one BP executive described to Adweek as “a radical conversation with consumers about the paradox of the need for energy and the cost for getting it.” TV spots showed ordinary looking people being asked questions like, “What would you rather have, a car or a cleaner environment?” Says one woman, “I can’t imagine being without my car. But that compromise is very hard to make where we are.” Then the punch line flashes on the screen: “We voluntarily introduced cleaner fuels, six years before EPA mandates … these low-sulphur fuels reduce ozone pollution….It’s a start.” Whew. Thank goodness for BP, saving us from making those tough choices between preserving the polar ice caps and taking the bus.
Other ads had the appearance of being hard-hitting—including one that asked people what they would like to say to oil company executives. “Think about your children,” one woman says. “They’re breathing the air I’m breathing, that you’re breathing, and it’s bad. And down the line, they will suffer. And you know, think about that. You know, if you have alternatives, invest the money in alternatives. You’ll still make money. It won’t make you a Communist. It’ll just make you a better human being.” The television and print ads always ended with a plug for BP as “a global leader” in clean energy production. (Some examples appear at the end of this post.)
Accompanying the ad campaign was a series of public pronouncements from Lord Browne, who had been dubbed the “sun king” and the “green oilman,” and was also reputed to be Tony Blair’s favorite businessman. Browne announced a plan to reduce company-wide greenhouse gas emissions, and another to invest $8 billion in alternative energy and greenhouse gas abatement projects–an impressive figure that was actually a pittance relative to BP’s overall budget.
The gimmicks appeared to work. In 2001, BP had already been chosen as the “company that does most to protect the environment” in a survey by the Financial Timesthat polled not only corporate executives but also activist groups and the media. “There appears to be near consensus,” the paper reported, that BP “has made exceptional efforts to replenish environmental resources, develop alternative fuels and communicate with stakeholders.” As for the general public, a 2007 “green brands survey” found that BP was perceived as more green than any of the other petroleum companies, and also headed the list of companies that had “become more green” in the previous five years.
And what else was going on at BP while it was supposed to be “becoming more green”?
In 2004, BP engaged in a “massive manipulation” of the U.S. propane market. The Commodity Futures Trading Commission ordered the company to pay $303 million in criminal penalties and restitution to victims of its trading abuses.
In 2005, a devastating explosion and fire at a BP refinery in Texas BP killed 15 workers and injured 170 others. In 2007, BP was fined $50 million for environmental damage causes by the refinery blast. In 2009, the Occupational Safety and Health Administration levied an additional fine of $87 million fine–the largest in OSHA’s history–for the company’s “failure to correct potential hazards faced by employees.”
In 2006, more than 260,000 gallons of crude poured onto the Arctic tundra from a BP pipeline near Prudhoe Bay—the worst onshore spill in Alaskan history. Whistleblowers had already revealed that BP ignored warnings about leaking and corroded pipelines and had tried to cover up earlier, smaller spills, and Congressional investigations found that negligence and cost-cutting were factors in the 2006 disaster. BP was fined more than $20 million.
Also in October 2007, the U.S. Minerals Management Service fined BP for a series of violations related to a near-blowout at an offshore rig in 2002. The violations included inadequate training of BP workers in “well control.”
During the period that all of these human and environmental catastrophes were going on, BP sales rose from $192 billion in 2004 to $240 billion in 2005, and then to $266 billion in 2006. The company’s profits fell in 2007 following the disasters and fines, but began rebounding as soon as BP announced massive layoffs. The dapper Lord Browne of Madingley, however, resigned after reports faulted his leadership in contributing to the accidents–and after he was found to have lied to a court about his relationship with a former male escort.
BP’s new CEO, Tony Hayward, had been head of Exploration and Production for BP since 2003. According to the New York Times, Hayward “promised to refocus the company and change the culture, emphasizing safety.” In the last few years, BP has spent less time promoting itself as a green company and more time depicting itself as safe, competent, and forward-thinking–a claim that has now proven even more preposterous than the greenwashing was.
The Times article remarked that for Hayward, ”the accident threatens to overshadow all of the efforts he has made to burnish the tattered reputation of the company.” In a meeting with BP executives in London following the spill, Hayward reportedly asked, “What the hell did we do to deserve this?”
Tony Hayward himself has the answer, since according to the Times, ”He also expanded the company’s already aggressive exploratory efforts in the deep waters of the gulf.” In fact, “last year, the same platform that has now sunk to the sea floor drilled the deepest well in history, opening one of the largest new fields in the world.” New information is emerging every day on the many ways in which BP cut corners when it came to safeguards on the rig–some of them implicated in the current disaster.
Hayward got a 40 percent pay increase in 2009 based on BP’s “improved performance.” And just recently, the company announced earnings of $5.6 billion for the first quarter of 2010, more than double the same quarter last year. The disaster in the Gulf, of course, has not been good for BP’s share prices. But a Morningstar oil stock analyst blithely told the New York Times that the worst oil spill in U.S. history “will test Tony and his ability to respond to this situation.” She confidently concluded, “Certainly, BP will survive this.”
Whether the Gulf Coast will survive it is, of course, another question. If it were up to me, I’d gladly trade the future of BP for the life of one sea turtle.
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Dude, where’s my fuel? 2006 ads from BP’s greenwashing campaign.
When Obama’s new deficit commission gets going, it intends to be “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 Wednesday will upstage 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 as I’ve written before, he’s already stacked his own commission with people who lean heavily toward one particular solution: cutting entitlements. And now he is working hand-in-glove with a wealthy private organization whose central purpose is to cut Social Security and Medicare. Talk about foregone conclusions.
Pete Peterson: Beating a Dead Horse
Peterson, according to Forbes, 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 is 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. 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.”
The 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.
For years, Massey Energy has been engaged in what a Washington Post editorial called “a distressing effort to render ineffective the mining regulations that were strengthened in 2006 to bring a measure of safety to a very dangerous job.” By ignoring–and then challenging–an array of safety regulations, the company avoided a lot of expense and bother. Of course, it also placed its workers’ lives at risk–but apparently, Massey gambled it could lose a few miners and still make a profit.
This morning’s news from Fox‘s “MarketWatch” proves the company right, as Wall Street analysts conclude that the “financial impact” to Massey of the 29 deaths ”will be immaterial.”
NEW YORK — Massey Energy on Monday drew an upgrade to buy from hold at S&P Equity Research, while analysts cut their 2010 earnings estimate by 7 cents a share to $2.55 a share on production losses and costs following an explosion that killed 29 miners. “We believe that the financial impact of the Upper Big Branch mine tragedy to Massey Energy will be immaterial,” S&P said in a note to clients. “Our opinion is based on our analysis of industry mining accidents, Massey’s indemnification to litigation via insurance, and our belief that the company has ample capacity to mitigate most of the 1.6 million tons of production that was expected to be sold from Upper Big Branch.”
Also worth reading today: Art Levine’s piece on Truthout about Massey’s history of union-busting, and its effect on mine safety.
The pitched battle over health care reform, won with considerable ease as predicted here long ago by the insurance, drug, and associated medical industries, can be viewed as just a warmup act for the fight over financial reform. As the main event draws near, eager reportorial eyes are supposed to turn to the awesome spectacle of Ben Bernanke’s Fed policing itself in the interest of protecting consumers. No. This is not a play by Dario Fo.
The base issue here is how corporate America can screw more money out of the middle and lower middle classes. They weren’t about to change health care and they sure as hell are not going to give up their authority over the nation’s wealth.
So what’s this all about? Very simply put, it is about reducing middle class America’s income by cutting entitlements. And that starts with Social Security.
Dave Lindorff on Counterpunch very neatly captures the moment:
The corporate press is weighing in with dire warnings that this year, six years ahead of what had been predicted only a few years ago, the Social Security system would be paying out more in benefits than it takes in from the payroll tax. The reason for this earlier-than-anticipated event is the Great Recession, the paper explained.
Well yeah. If you were 62, or 65, and you had lost your job, with no likelihood of it’s coming back, wouldn’t you, once your unemployment checks ran out, opt to start your retirement earlier than planned, so you’d at least have some money coming in each month? Oh, and with 10 percent of the work force currently unemployed (actually close to 21 percent if you count the people who have given up looking for a nonexistent job, and those who have taken some low-paid part-time work out of desperation), there is a lot less money being paid into the Social Security Trust Fund. So with beneficiaries rising faster than anticipated, and the total national payroll in sharp decline, of course things have gone negative for Social Security earlier than originally anticipated.
So what to do about it?
Hank Paulson and Pete Peterson are both calling for benefit cutbacks, an older retirement age and other attacks on the system. Paulson of course is the the guy who as Treasury Secretary under President George W. Bush, helped engineer the real estate bubble that brought the economy to its knees, and who then engineered the sweet deal that helped his former company, Goldman Sachs, come out of the crisis as the nation’s biggest bank, fattened by tens of billions of taxpayer bailout dollars. Pete Peterson, the former ad exec turned self-described economic guru has been a perpetual doomsayer about Social Security, calling for its privatization.
But really, what’s the crisis?
A wave of Baby Boomers is about to start retiring next year (actually for those born first, in 1946, who decided to retire early at age 62, Baby Boomer retirement began in 2008), but that’s a demographic wave that will eventually pass. In the meantime, financing the benefits for Baby Boomer retirees simply means that current workers–the Baby Boomers’ children and grandchildren–will have to pay more in payroll taxes. Or–and this is what has people like Paulson and Peterson scared–Baby Boomers and their allies among younger workers, may decide to use their unprecedented electoral clout to take those extra tax payments not out of younger workers, but out of their employers. There is, after all, no legal, theoretical or even mystical reason why the Social Security payroll tax should be split 50/50, with half being paid by the worker, and half by the employer. It could easily be a 40/60 split, with the employer paying 50 per cent more than the worker, or even a 30/70 split. That is a political question. Likewise, there is no reason on earth why the payroll tax should be set at the same percentage rate for all income levels, as it is now, instead of progressively calculated, so that high-income workers would pay a higher percentage of income into the fund than low-income workers. And finally, there is no reason why the income subject to the payroll tax (the FICA tax on your W-2 statement) should be capped (currently at $106,800), or why investment income should be exempt.
The so-called Social Security funding “crisis,” which has Republicans and many Democrats warning of the system’s looming “insolvency” as though Social Security were just another AIG, could be solved simply by just eliminating the income cap, and taxing investment income.
Oh, but the conservatives wail, if we raise the payroll tax, America will become uncompetitive, and our economy will collapse.
How then to explain Germany, where social security as a percentage of GDP is much greater than in the US (40 per cent of Germany’s adult population receive some form of government income, whether in the form of retirement payments, unemployment compensation or disability payments–far higher than in the US)? Despite its high social welfare budget, and its high wages, Germany is the second-largest exporter in the world after China, and despite Germany’s being a huge importer of goods and services, second only to the US, overall, Germany is a net exporter.
Clearly, the problem with America’s economy is not high social security costs, and the “crisis” facing Social Security is not that it is going to “go bankrupt.” It is simply that the corporate interests in America, and the wealthy, don’t want to have to pay for the system. They want the lion’s share of the funding to be paid by ordinary workers and the poor.
The Republicans look a sour lot this morning, but the pharmaceutical industry, which helps foot the campaign bills of a sizeable chunk of members of both parties, is delighted with the legislation, and with its Democratic friends in the White House and on the Hill.
Members of Congress in both parties generally have lined up behind the insurance and pharmaceutical industries from the get go. So it should come as no surprise that the Democrats, who long ago gave up any pretence of opposing corporate power, found a way to accomodate the pharmaceutical companies on the way to its tepid reform. To a large extent, the “debate” over health care was a show debate, an extended round of Washington smoke and mirrors. The administration early on cuts its deal with Big Pharma, and pretty much stuck to it throughout the process.
In fact, the Dems actually made the drugsters look good, celebrating the industry’s generous “concessions” and “discounts” while ensuring that no real threat to Big Pharma’s profits would make their way into the final bill.
The industry’s main goal from the very beginning has been to fend off any government power to negotiate or seriously regulate drug prices–and this they did.
Big Pharma’s second big win was to prevent any measure that would have opened the way for American consumers to buy less expensive drugs abroad, especially from Canada.
At the same time, the supposed give-backs by the drug industry are projected to more than pay for themselves. The much-lauded discounts on brand name drugs for seniors in the Medicare prescription drug program, for example, are good for Big Pharma because they discourage oldsters from switching to generics.
And more insured people simply mean more money coming into the coffers, for Big Pharma as well as for the insurance industry.
Confirmation of the industry analysis came early in the day from the stock market, where drug stocks initially remained level; there certainly was no rush to dump shares, which is what would be expected if the bill actually represented any threat to profits. And by 1 p, EST, CNN Money was reporting a rally in health care stocks.
“I was unable to find anything in there that would cause me to have anxiety if I were a shareholder in a pharmaceutical company,” Ira Loss, a senior health-care analyst at the research firm Washington Analysis, told Dow Jones. According to the ticker story:
Billy Tauzin, who led the industry’s negotiations on health care with lawmakers, said overall drug makers fare well. “While we’re not totally happy,” Tauzin began, “we generally feel like it tracks with our principles.”
Sanofi-Aventis SA (SNY) Chief Executive Christopher Viehbacher said in an interview that the impact of the legislation will be neutral to slightly negative “but better for the industry than if healthcare reform didn’t pass.”
Tauzin, head of the Pharmaceutical Research and Manufacturers of America or PhRMA, and Viehbacher said getting protection for brand-name biologics is among the important provisions for the industry. Drug makers pushed hard to get 12 years of exclusive market protection while the White House and some lawmakers wanted to lower the protection to seven years.
Despite fees and rebates imposed by the legislation, “analysts say drug makers will end up recouping those costs through new customers: The bill would provide insurance coverage to an additional 32 million Americans.” The Dow Jones story continues:
Chalk up another good round for Pharma and Biotech in health care reform,” began a note to clients Friday from Concept Capital, a research firm.Ken Tsuboi, co-manager of the Allianz RCM Wellness Fund, sees the impact of bill, and its $90 billion in concessions over 10 years, as relatively minor in an industry that has annual global sales of about $750 billion, with about $300 billion in the U.S., and margins close to 30%.”I think that it is actually a pretty good deal for Pharma,” Tsuboi said.
The GOP, which purports to be the party of big business, ought to be applauding at least these portions of the health care reform–and perhaps when the cameras go away, some of them will quit bitching and count their blessings. As for the obnoxious Tea Party gang, if they start threatening the real power in this country, which is vested in corporations, they may well find themselves whipped and isolated.
Less than a month after the Senate rejected a proposal for a bipartisan entitlement commission, President Obama has created his own version by executive order. It is not, of course, called an “entitlement commission”–that unsavory term has been banished from the political lexicon, since it clearly frightens the geezers. Instead, it is called the National Commission on Fiscal Responsibility and Reform. (Who wouldn’t support that?) The shorthand names are the “deficit commission” and the “debt panel.” This last term is remarkably similar to the much-maligned “death panels”–which seems appropriate, since its primary purpose is to pull the plug on old-age entitlements. Despite protestations to the contrary, the commission exists primarily to make cuts to Social Security and Medicare.
The commission’s slant is evident from the choice of its two co-chairs: former Wyoming Republican senator Alan Simpson, a long-time foe of entitlements, and Erskine Bowles, the middle- right former Clinton chief of staff. The rest of the 18-member commission will include 6 Republican and 6 Democratic members of Congress, and four more members named by Obama. They are supposed to make a report and recommendations to the president in December, after the fall elections, and Obama is expected to forward the recommendations to Congress.
In the best-case scenario, Congress will do the same thing it has done with all of Obama’s other proposed reforms–i.e. nothing. Because if it acts at all, it will almost certainly decide to pay down the deficit at the expense of the social safety net. While Social Security may be the proverbial “third rail” of politics, the other debt-reducing options–raising taxes on the rich, or making corporations pay their fair share–will be seen as even more deadly in the current political climate.
An aggressive move to cut entitlements is, of course, a long-cherished conservative goal. The Heritage Foundation has been promoting the idea for decades, and was a major cheerleader for creation of a Congressional entitlement commission. Billionaire anti-entitlement activist Pete Peterson has bankrolled a huge lobbying effort for a commission that could ready the cuts, then ram them through Congress on a fast track yes or no vote. When that idea ran into heavy opposition in the Senate, Obama came up with his comparatively toothless version.
The driving force behind the commission—in addition to Peterson’s determined lobbying– is a group of conservative Blue Dog Democrats, some of whom would most likely be just as happy to see Social Security privatized. They will likely join with Republicans to support cuts in Medicaid, Medicare, and Social Security.
This same alliance will also be key to a scaled-back health care reform, which looks to bypass altogether the so-called liberals in Congress. Instead, it depends upon senior conservatives in the Republican party, led by retiring New Hampshire Senator Judd Gregg. Gregg has said he thinks the health care system needs changing, and he wants to engage in “constructive dialogue” with the president on reform. But any plan Gregg champions will have to be relatively meager and inexpensive. The fiscally conservative Gregg joined with Democrat Kent Conrad to support the Congressional version of a debt commission, and he now seems to making common cause with the perennial Democratic health care compromiser, Max Baucus.
The long and the short of this situation is that the Democratic administration, along with a small group of conservative Democrats in Congress, may make considerable headway toward doing what neither Ronald Reagan nor George W. Bush was able to pull off. They will likely make cuts to Social Security, while at the same time advancing Obama’s government-subsidized “automatic IRA” scheme, which would divert people’s earnings into 401K-style retirement accounts. These, of course, would be invested by Wall Street, helping to rebuild the finance industry. So in the end, we could see a de facto privatization of a portion of Social Security–the ultimate conservative dream, brought to us by the Democrats.
By the same token, the Democratic-led health care reform is likely to bring about some cuts to Medicare and Medicaid–the only single-payer health care this nation has ever known. It will do so while preserving the power and wealth of the health care profiteers who are largely responsible for skyrocketing costs. The corporations, once again, are set to emerge victorious.
Meanwhile, the old, sick, disabled, and poor, who rely on entitlement programs, will bear the weight of the national debt. The low- and middle-income people still reeling from the recession–who need more, not less, government spending–will be left out in the cold, victims of what the Center for Economic and Policy Research calls “the deficit hawks who distract the public and policy makers from the policies necessary to bring the economy back to full employment.”
The people and policies responsible for running up the deficit look like the only ones who won’t be taking a hit. In a report released on Wednesday called “Where Today’s Large Deficits Come From,” the Center on Budget and Policy Priorities added up the numbers and found: “In fact, the tax cuts enacted under President George W. Bush, the wars in Afghanistan and Iraq, and the economic downturn together explain virtually the entire deficit over the next ten years.”
Readers of Unsilent Generation may be interested in a new online petition directed at members of Congress, concerning the work of the National Commission on Fiscal Responsibility of Reform, which I’ve written about here many times before. Here is the introduction to the petition, which was started by Alternet. You can read the text of the petition, and sign it, here at Change.org. 
