You probably thought the greatest threat to Social Security in recent history was the Republicans’ efforts to privatize it. Wrong; it was Bill Clinton’s efforts, and certain Democrats and Wall Street insiders who haven’t given up that moneyed-class love affair with rolling back the New Deal are continuing the attempt.
In his book, Listen Liberal, Thomas Frank quotes Steven Gillon’s 2008 book The Pact when describing the environment leading to a 1997 agreement between Clinton and Newt Gingrich, the intent of which was nothing less than the privatization of Social Security. They almost pulled it off.
Frank points out that Wall Street spent a lot of effort and money in the 90’s trying to convince politicians and the public that Social Security was in deep trouble and the only way to save it was to cut benefits, raise the retirement age, force government workers who have a different plan onto Social Security, and most importantly, turn that money stream over to Wall Street. Central to Clinton’s bargain with Gingrich was that in return for privatization the Republicans would let Clinton use his budget surplus to pay for the existing retiree obligations instead of using the surplus to pay for tax cuts. That money had to come from somewhere.
Now, in looking up Gillon to check Frank’s claim I came across a 2010 article discussing his book, by FiredogLake.com’s founder Jane Hamsher, oddly enough titled “How Monica Lewinsky Saved Social Security,” which was my original working title for this diary. Hamsher goes into more of Gillon’s details, so I quote here from her article quoting Gillon:
In private conversations with Gingrich and with Texas Republican Bill Archer, powerful head of the House Ways and Means Committee, the president promised to “provide political cover” for Democrats and Republicans by announcing his support for raising the minimum age required for Social Security and for changing the COLA formula. The president was willing to oppose the leadership of his own party and support the Republican demand for private accounts.
According to Gingrich:
“I understood that I would have to fight some of my old guard,” Gingrich recalled. “He understood that he would have to fight his hard left. Together we could shape about a 60 to 65 percent majority. I was happy for him to be a successful president. He was comfortable with us being a successful Republican congress.”
It looked like they had a path to success. Clinton would take the heat from Democrats and work through “centrist” Democrats and Republicans, as he had when he passed NAFTA and welfare reform.
And then Monica Lewinsky broke into the headlines:
Politically, it forced Clinton to seek refuge in the liberal wing of his party, the same group he had agreed to abandon a few months earlier. “All opportunities for accomplishment were killed once the story came out,” reflected a senior White House official. “If we cut a deal with the Republicans on Social Security there was every possibility that the Democrats, who were the only people defending him in Congress against these charges, could easily get angry and abandon him.” With conservatives in an uproar, Gingrich lost his political wiggle room and was forced to appease his right-wing base. If Gingrich did not “feed the conservative beast,” recalled a colleague, he would have been removed from his job as Speaker.
As Erskine Bowles himself said, “Monica changed everything.”
I’m sorry to have Erskine Bowles appear suddenly like that, but I needed his comment to finish the quote. He is given a lot more space in Hamsher’s article (and Gillon’s book). In short, the former investment banker Bowles was Clinton’s Chief of Staff and go-between with Gingrich as well as a strong privatization proponent himself. You might recall that more recently Obama appointed this very same Bowles to his Deficit Commission, and that once again talk of raising the retirement age, reducing benefits, and turning the money stream over to Wall Street was back in vogue. At least, until the election started looming and more people started paying attention.
For extra credit: you could do worse than to spend a few minutes with the results from googling “steven gillon the pact”.