You may or may not have heard of Peter G. Peterson, but he has been trying very hard lately to make you believe your Social Security is in jeopardy. As Ryan Grim and Paul Blumenthal point out in their article "Peter Peterson Spent Nearly Half A Billion In Washington Targeting Social Security, Medicare," Peterson has spent "at least $458 million," from 2007 to 2011, to make sure that you feel that you are about to lose your "entitlements" and that we have to deal with this immediately.
So who is this mystery master of manipulation? Peterson has spent decades on Wall Street, amassing a net worth of nearly three billion dollars. He has spent some time in politics, serving under President Nixon as Secretary of Commerce. He also co-founded infamous private equity juggernaut Blackstone Group. Sounds like your typical fat cat, right?
Not exactly. While most of Peterson's cronies make no bones about their right-wing politics, Peterson really wants you to think of him as nonpartisan. Peterson is definitely a conservative, but through his billion-dollar-endowed Peter G. Peterson Foundation, he has made a gargantuan effort to present himself as a friend of both sides of the aisle. Peterson has given grants to conservative think tanks such as the Heritage Foundation and the American Enterprise Institute. But he has also given grants to the likes of the liberal Economic Policy Institute, and Peterson's foundation has brought the likes of Bill Clinton to its fiscal summit.
By attempting to present himself as nonpartisan, Peterson has been able to set our nation's agenda. Both Democratic and Republican politicians are being told by their sources of information that Social Security needs reform, so Social Security reform has, of course, become a big political issue. Peterson isn't exactly throwing handfuls of money at grantees and yelling, "Tell everyone we have to reform Social Security!" But he is making his priorities our priorities. As Michael Hiltzik puts it in his article "Unmasking the most influential billionaire in U.S. politics," "Peterson's influence in national politics stems largely from his ability to make his interests appear eclectic and nonpartisan." Peterson declined Hiltzik's interview request for the article.
One of Peterson's latest projects, the bipartisan Fix the Debt campaign, is spending millions to convince us all we need to take one for the team if we want to save Social Security. Fix the Debt proposes a gradual COLA decrease, as well as an increase in retirement age to 69 years old. Mitt Romney, by the way, champions this plan.
This sounds like a reasonable sacrifice to save Social Security, right? After all, if we don't do something now, we're going to lose it, right? Wrong. As of 2011, the Social Security Trust Fund had a surplus of $2.7 trillion. The Social Security Board of Trustees states that the fund will not be exhausted until 2033. And at that point, Social Security recipients will still receive 75 percent of expected benefits. But thanks to the efforts of Peter Peterson, we talk about Social Security as if we are going to lose it tomorrow. If you ask Peterson, the sky is indeed falling.
Do our "entitlement" programs need reform? Yes. If we continue our present course, we will run into trouble in a couple of decades. Is Social Security circling the drain as we speak? No. But Peterson wants you to think it is. If we believe this, we are much more likely to accept losing some of the benefits of the system we pay into every working year of our lives.
What we don't talk much about, though, is an alternative. Right now the Social Security payroll tax cap is set at $110,100, meaning that any yearly income earned above this is not taxed for Social Security. Next year this figure will increase to $113,700.
But lifting the payroll tax cap altogether instead of raising it would, according to a report from the Social Security Administration, keep the Social Security Trust Fund in surplus for another 75 years, even while paying higher benefits and allowing for benefits earned on some income above the cap (the report was produced by the SSA's Office of the Chief Actuary to analyze the potential effects of The Preserving our Promise to Seniors Act proposed by Rep. Ted Deutch, D-Fl.). And the only Americans affected by removing the cap would be those making over $110,000 per year. If you're making less than that, 100 percent of your income is subject to the payroll tax, anyway.
So should we all listen to Chicken Little Peterson? Should we retire later and get less back from the system into which we ourselves pay (and into which Peterson and friends pay a fraction of a fraction of their income)? Or should all Americans pay their fair share of payroll tax? The answer seems pretty clear.