How Monica Lewinsky Saved Social Security

by ROBIN BLACKBURN
CounterPunch, OCTOBER 30, 2004

Had it not been for Monica’s captivating smile and first inviting snap of that famous thong, President Bill Clinton would have consummated the politics of triangulation, heeding the counsel of a secret White House team and deputy treasury secretary Larry Summers. Late in 1998 or in the State of the Union message of 1999 a solemn Clinton would have told Congress and the nation that, just like welfare, Social Security was near-broke, had to be “reformed” and its immense pool of capital tendered in part to the mutual funds industry. The itinerary mapped out for Clinton by the Democratic Leadership Committee would have been complete.

SNIP...

The “Special Issues” secret team was set up by then-Deputy Treasury Secretary Larry Summers (later elevated to Treasury Secretary and now President of Harvard) and Gene Sperling, the head of the Council of Economic Advisers. The Deputy Treasury Secretary’s fondness for schemes to privatize Social Security comes as no surprise. As Chief Economist of the World Bank in the early 1990s Summers had commissioned a notorious report, “Averting the Old Age Crisis”, that argued that Merrill Lynch and Fidelity would be better at pension provision than any government. In fact governments should offer only a safety net and farm out their power to tax payrolls to private financial concerns, which would run mandatory funded pensions on the Chilean model. The task of the Special Issues group was to find an installment of privatization that could reconcile realistic Republicans and Democrats, and be sold as still honoring most existing entitlements.

Participants at the Harvard conference conceded that severe technical problems beset efforts to introduce commercial practices. The existing program has low administration costs whereas running tens of millions of small investment accounts would be expensive. The secret White House team sought to finesse the problem by pooling individual funds and stripping down the element of choice or customer service. But Summers was unhappy: as one Team member now recalls it, “Deputy Secretary Summers was fond of saying that we had to guard against the risk of setting up the Post Office when people were used to dealing with Federal Express”. And pooled funds were also to be avoided because they would risk government control of business.

SNIP...

In his 1999 State of the Union address Clinton seized the initiative from the privatizers with a bold new plan that gave substance to the “Save Social Security First” slogan. He proposed that 62 per cent of the budget surplus should be used to build up the Social Security trust fund. He promised to veto any attempt to divert Social Security funds to other uses, and he urged that 15 per cent of the trust fund should be invested in the stock market, not by individuals but by the Social Security Administration.

SNIP...

Federal Reserve chairman Alan Greenspan was willing to see the budget surplus pledged to Social Security but he denounced the plan to invest the trust fund in equities on the grounds that it would lead to government interference in business. A writer in the New York Times, January 25, 1999, warned that if the trust fund was allowed to invest in stocks and shares it would be impossible to prevent the politicization of investment: “The danger is that Congress will meddle, for example, steering funds into environmentally-friendly companies rather than, say, tobacco companies.”

CONTINUED...

http://www.counterpunch.org/2004/10/30/how-monica-lewinsky-saved-social-security/