Wednesday, July 23, 2014

Gene Sperling's Advice to the Wealth-lorn

 Or: "How the zombie idea of privatizing Social Security can be reanimated by a concern-trolling Wall Street Democrat."

Former Clinton-Obama economic adviser Gene Sperling, who brought you such populist hits as the repeal of Glass-Steagall and the Sequester, has now written an op-ed in the New York Times, purporting to give advice to the struggling masses in this Age of Inequality:

Share Our Wealth! Invest in 401(k)s!We'll do all the paperwork!

Sperling, a former Goldman Sachs consultant who allegedly left the Obama administration this spring, is now affiliated with the Milken Institute, a think tank in Santa Monica, California. You may remember founder Michael Milken as the "junk bond king" who went to prison in the 90s, back when prosecutors actually prosecuted crooked financiers. Milken has since recouped his billions and has gained respectability in Democratic centrist circles as a political fund-raiser, fixer and philanthropist. And why not? The Age of Inequality is also the Age of Legalized Corruption. Banksters don't go to jail. They simply make deals with prosecutors to stay out of jail and continue victimizing the working stiffs of America.

But I digress. In his Times op-ed, Sperling cynically and ham-handedly bemoans the fact that poor people get less return on their savings than rich people. So what they should do is, hand over all their loose change to Wall Street. He doesn't actually come right out and call for privatizing Social Security, of course, but that's what he's ultimately suggesting within his double-talking verbiage:
A government-funded universal 401(k) would give lower- and moderate-income Americans a dollar-for-dollar matching credit for up to $4,000 saved annually per household. Upper-middle-class Americans could get at least a 60 percent match — doubling the incentive they get today. The match would be open to workers even if their employers were already matching, which would encourage employers to keep contributing to savings. The match would also be available through I.R.A. contributions for those who were self-employed or who wanted to keep saving even while they were temporarily not working.
Employers would have to provide automatic payroll deductions for their employees (while allowing those who still wanted to opt out to do so). Setting the default at “opting in” would ensure that workers did not miss out on the match provided by a universal 401(k). The government could set requirements for low fees, transparency and safety to allow for vigorous competition in the private sector while allowing individual savers access to a version of the plan that members of Congress use for their own retirement savings.
 This proposal is very similar, if not identical to, President Obama's own cynical "MyRA" scam that he rolled out to thundering silence at his State of the Union address this year. So it appears that the name is being changed to protect the malevolent. Sperling lumbers on for awhile before finally cutting to the chase:
 Costs need not be a roadblock. Among many ways to do it, moderate reforms to the estate tax could allow married couples to leave up to $7 million to their heirs tax-free (instead of the current $10.7 million) while generating over $200 billion in resources over the next decade, which could be used to help tens of millions of savers build their own estates. Even if a universal 401(k) ended up costing the government more than expected, it would still increase national savings overall if the public incentives led to additional private savings.
The Reagan zombie is resurrected. It's all trickle-down, all the time. Why didn't Sperling just say so in the first place?  My published comment (which, in retrospect, was more polite than this charlatan deserves):
Since Gene Sperling was touting cuts to Social Security as part of a deficit reduction deal with the GOP as recently as last fall, his universal 401(K) proposal sounds suspiciously like a Wall Street gateway drug to the privatization of FDR's great social insurance program.
Given that 75% of Americans are living paycheck to paycheck and don't have any savings simply because there's no money left after they eat, heat and barely survive, this op-ed is a tad disingenuous. And that's putting it kindly.
The part about lowering the cap on the estate tax to $7 million to help the savers of the future is a dead giveaway that this advice column is not meant for the average working stiff or unemployed person -- who's lucky to have two nickels to rub together after robbing Peter to pay Paul every month.
 Sperling does not explain how the $200 billion generated by estate tax reform would help anybody but the trust fund kids.
Here's a thought. How about sending a stimulus check to every man, woman and child in America to spend or save as they see fit? It would provide an immediate boost to the economy. How about raising or scrapping the cap on FICA contributions to ensure the solvency of the trust fund into perpetuity?
How about letting students borrow at the same low rates as banks? How about a guaranteed national income or living wage law?
Enough of these Very Serious and immodest proposals from economists who pretend to care about wealth inequality in an election year.
Speaking of the Krugmanism "very serious people," I suspect that Sperling's op-ed is just part of the vast muffled, orchestrated cry of the wealthy who are being unfairly ignored in this election year.... because politicians don't dare talk about cutting entitlements and immiserating the poor when their own political hides also are contingent upon pretending to care for the voters. The sadism has to be euphemized. Or in this case, Sperlingized. They won't rob you with a six-gun. They'll do it under cover of darkness....  with a Fulgor Nocturnis.

Sperling was among the plutocratic culprits sounding the false alarm over the debt and deficit crisis, debunked soundly in Paul Krugman's last column. So they have to come up with ever newer ways of saying the exact same thing. The latest way is smarmy concern-trolling as a means of stealing from the public and getting even more for themselves.

As I wrote in my comment to the Krugman piece,
If the debt crisis is such a crock, why are we still saddled with austerity? Correction: why are we still saddled with austerity that exempts the bloated war machine, the surveillance state, and corporate welfare for the super-rich?
It's been estimated that the $398 billion wasted on the F-35 fighter alone could buy each of the 600,000 homeless Americans a $600,000 home. And the GOP is having meltdowns over a paltry $10.10 minimum wage? They'll only fix our roads if employers can delay paying into pension plans?
Deficit hysteria might currently be on "mute," but signs of its undeadness are still out there. Surviving at the White House website is a braggy blurb about the trillions already achieved in deficit reduction, but how "we" still have a ways to go toward "living within our means." Chained CPI for Social Security might be officially gone this election year, but then-Press Sec. Jay Carney assured us that it's still on the table should the GOP ever choose to join the feasting on the old, the sick, and the poor.
Paul Ryan is merely resting his hysterical voice, reclining on his elite hammock of dependency during his Ayn Rand summer reading break.
Meanwhile, even the progressive caucus's proposed "Better Off Budget" devotes $1 trillion more to deficit reduction than it does to investments over the next decade. 
 The austerity cult refuses to die. Could it be because the only people who care about the debt and the deficit are the fat cat plutocrats running the place?

Sperling (left) Joins Obama At the Feast

17 comments:

Bill Neil said...

Thanks once again Karen. How did you know that Gene Sperling was one of my "favorites"?

I took him on directly in one of my long essays in 2012: "The Costs of Creative Destruction: Gene Sperling vs. Wendell Berry."

Readers who would like a copy, are welcome to shoot me an Email at w.neil@att.net and I'll send you a MS-Word version, which will be easier on the eyes than the old four part online posting at ourfuture.org, which was removed some time ago anyhow.

Pearl said...

I was watching a very interesting program about the Abolition years before the Civil War on TV with the stories of people who had the courage to hide slaves fleeing to Canada and risking their lives. If caught or even accused by others they went on trail for treason and the slaves were returned to slavery or worse. Foremost was the divisiveness between white citizens on this issue and the freedom of the government to imprison, torture or kill those who were believed to have been guilty of helping others flee as well as the victims fleeing for their lives of torture. The atmosphere of hatred, lack of compassion among many with vengeance in sight was no different from the current atmosphere of fear today.
The mentality of people who felt superior and could control other lives was alive then as it is now. Different times, different issues but the same basic inhumane reactions to other human beings. Of course eventually there was some resolution of sorts with the Civil War but basically we haven't sorted out how to deal with the ugly mentality of those in power today as in the past. This lives on and is a deeper problem beyond the conflicts on the surface and how to best deal with the realities past and present is a real challenge now. I only hope many people are following Karen's and other courageous reporters contributions for public viewing and become informed and willing to help victims flee from the imprisonment of their lives in the U.S. of today. I think constructive reaction is finally setting in. Maybe events like the invasion of Gaza and the shooting down of the plane over the Ukraine will be of some help.

Zee said...

@Karen--

I don't trust a single word that comes out of the mouths of the likes of either Sperling or Krugman.

As you have correctly pointed out, Sperling is simply a tool—and, indeed, former resident—of Wall Street, with his million-dollar payments from Goldman Sachs. And hell. The guy is merely a lawyer, meaning “probable pond scum,” IMHO. Every article that I have read about the guy relative to “economics street cred” stalls out at stating only that he “attended Wharton...,” not that he actually ever graduated. e.g.

“Mr. Sperling graduated from the University of Minnesota and Yale Law School, and attended Wharton Business School. At Yale Law School he was Senior Editor of the Yale Law Journal. He is a native of Ann Arbor, Michigan, where his parents still live.” (My bold emphasis.)

http://clinton4.nara.gov/WH/EOP/nec/html/sperling.html

“Sperling was born to a Jewish family...in Ann Arbor, Michigan, where he attended the alternative Community High School. He received a B.A. in political science from the University of Minnesota, a J.D. from Yale Law School, and attended The Wharton School of the University of Pennsylvania. In the 1990s Gene Sperling worked for New York Governor Mario Cuomo.” (My bold emphasis.)

http://en.wikipedia.org/wiki/Gene_Sperling

So as with all lawyers, “How do you know when Gene Sperling is lying? When his lips are moving.” “Economist?” Hah!

But continuing on to liars amongst the rich, powerful and influential, correct me if I'm wrong, but I believe that it was in the context of a past discussion about Paul Krugman's incessant apologies for—if not outright lies about the “successes” of—ObamaCare, that even dear Pearl admitted that she no longer trusted a word that came out of Krugman's mouth. I feel the same way.

Krugman has the academic “economic credentials” that Sperling seems to lack, but he's proven himself to be unreliable in the “truth department” many times over when it comes to apologizing for President Peace Prize and ObamaCare.

As Denis has said in the recent past, sometimes one has to try to separate the wheat from the chaff. But at some point, about now even Progressives have to question Krugman's integrity and wonder if he's mostly chaff, as Pearl has—I think—finally done. (My memory fails me, but I think that armed with Google and sufficient time, I think that I could find the exact quote if necessary.)

So why trust Krugman so “infallibly” when it comes to the topic of national economic policy?

Like Sperling, he has a socio-politico-economic outcome that he wants to achieve that he thinks is consistent with a socio-politico-economic position that he wishes to preserve amongst the white-wine-and-brie set. One wouldn't want to suddenly not be invited to all the best NYC and DC parties, would one, whether one is a Krugman or a Sperling?

I think that I'd rather trust my financial, retirement future to a high-mountain New Guinean shaman than I would either the likes of a Krugman or Sperling.

Denis Neville said...

Sperling’s “Universal 401(k)” – for every dollar spent on the universal 401(k), the federal government could spend one dollar less on Medicare and Social Security benefits? Sperling’s way to help the poor by cutting Social Security and Medicare and forcing the poor to save. Jeez!!!

Not to mention…

“The 401(k) is one of the only products that Americans buy that they don’t know the price of it. It’s also one of the products that Americans buy that they don’t even know its quality. It’s one of the products that Americans buy that they don’t know its danger. And it’s because the industry, the mutual fund industry, have been able to protect themselves against regulation that would expose the danger and price of their products.” - Teresa Ghilarducci

Labor economist and pension reform advocate Teresa Ghilarducci, who has been called “the most dangerous woman in America” by conservatives, says that we need a mixed system composed of Social Security, employer defined-benefit pension plans, and a new type of personal retirement savings account called a Guaranteed Retirement Account (GRA)

Ghilarducci’s plan calls for all workers not enrolled in an equivalent or better defined-benefit pension to enroll in a GRA and would require them to save five percent of their annual income, with a matching contribution by the employer, to be deducted along with payroll taxes and credited to individual accounts administered by the Social Security Administration.

GRAs are like universal 401(k) plans except that the government would invest and manage the pooled savings. The Guaranteed Retirement Account would borrow the best features of defined-benefit and defined-contribution plans, including guaranteed retirement benefits that last a lifetime, low administrative costs, and steady contributions. GRAs would avoid stock market risks. The funds would be conservatively invested in financial markets. Workers would earn a fixed 3% rate of return adjusted for inflation, guaranteed by the federal government. If the trustees determined that actual investment returns had been consistently higher than 3% over a number of years, the surplus would be distributed to participants, though a balancing fund maintained to ride out periods of low returns. These funds would be converted to life annuities upon retirement. Along with Social Security benefits, a GRA would replace approximately 70% of pre-retirement earnings for the typical retiree.

Tax breaks for 401(k)-style plans and IRAs would be converted into flat tax credits to offset the cost of these new accounts, so the plan will improve the retirement security of most Americans without costing taxpayers more than the current system.

Denis Neville said...

@Pearl

Re: “the same basic inhumane reactions to other human beings”

Many see the Palestinians today like so many saw the American Indians as merciless savages. Growing up in South Dakota, I heard many blame the squalid poverty and living conditions on the reservations on the Indians themselves, much like the Palestinians are vilified and blamed for their own destruction.

Israeli soldiers talk about the occupied territories @ http://www.breakingthesilence.org.il/

For ten years, Breaking the Silence has been collecting testimonies from Israeli soldiers who served in the Palestinian territories.

Blessed are the peacemakers, for they will be called children of God.

Pearl said...

Denis: you are so right about how people blame others for their plight when things are not working well for them. When my husband was offered a contract in Israel at the Technion by a former professor when he had to leave the U.S., Israel had been in existence for only a dozen years. We knew nothing of the problems with Palestinians nor Zionist expansionist plans and had believed their propaganda of basically making a safe haven for Jews who had suffered under Fascism in Europe. We picked up the truth those many years ago pretty quickly and were shocked at what we experienced. I wrote extensively about this time in our lives in my memoirs. When we finally were able to leave with other opportunities available, ending in Canada, my husband told family and friends what we had witnessed and he predicted a blood bath to come in that area in the future. You can imagine their reactions to our reports and we were partially shunned as a result.
In recent years, many young Israelis conscripted in the military have refused to be assigned to the Palestinian areas and many have had to serve some jail time as a result.
We were not surprised at the behavior of the Israeli military in recent years as we had witnessed the way children were raised with hatred for their neighbors and a feeling of entitlement for themselves.
A very disturbing and ugly period in our lives which disruption has had lasting effects on our children.

Pearl said...

P.S. And don't discount religious differences in this political battle between Israel and its adversaries. The ultra right wing religious party in Israel has and is playing a strong role as representatives in the Knesset and probably the same among the Palestinians. Arabs living legally in Israel and also having some representation in their parliament are not treated well especially when they don't accept the current policies of the country. Of course this issue of religion is played down for the press.

annenigma said...

News Flash - Israel has now bombed 46 schools, 7 hospitals, 56 mosques, and killed an average of 1 child per hour for 'defensive' purposes in Gaza.

The White House has asked Congress to add millions to the billions requested in border crisis funds in order to provide emergency assistance for Israel's Iron Dome missile defense.

You will now be returned to your regularly scheduled programming.

Pearl said...

Annenigma:

This IS the regular scheduled programming.

Zee said...

@Denis--

The idea of a Guaranteed Retirement Account sounds appealing, but, as always, I have a few questions.

It seems to me that the potential for corruption on the part of those who are doing the investment planning on behalf of the government and the account holders is astronomical, because the amount of money they will be investing will be similarly astronomical.

Hence, their financial dealings and status will have to be incredibly transparent and monitored, well, daily. Maybe they will have to place all of their investments in blind trusts for the duration of their government service, for starters.

Still, there will be boundless opportunities for under-the-table cash kickbacks to those doing the investing from those companies and funds that want “favored” investment status from the government. “Benjamins” stuffed in safe-deposit boxes or vaults at home aren't subject to audit.

There will also be limitless opportunities for insider trading on the part of the government investors, capitalizing on advance knowledge as to where the government plans to invest and divest on a daily basis. Even if the government investment planners have their stuff in blind trusts and may not be able to profit directly from insider info, they can still pass on information to friends and family in return for “consideration” to be determined at a much later and safer date.

How do we prevent the foregoing corruption from happening? How do we punish it if we detect it? As we did the Wall Street Wizards who precipitated 2008? That is, not at all? I'm of the personal opinion that stealing from the public coffers is the same as snatching bread from the mouths widders and orfinks, and should be punished by life in prison without any possibility for parole. But I doubt that will ever happen, because those government investors will inevitably have friends in very high places, else they wouldn't have gotten the job in the first place.

Governments are composed of people. People are corruptible. And the larger the potential payoffs—which could be huge if the government is investing for the entire working-age population of Americans—the greater the probability that that corruption will flourish. Hell, our Congresscritters already indulge in insider trading, and for them it's just considered a perq of their office!

Until I see some ironclad assurances that the foregoing flavors of corruption can be prevented, well, I would no more trust the government to manage my investment future than I would, well, a Gene Sperling or Paul Krugman.

Denis Neville said...

Don’t trust the government to manage our investment future?

According to David Cay Johnston, Social security is the best-funded and most stable government program. Social Security has a dedicated stream of income and the program actually ended with a $2.7 trillion surplus in 2011, almost twice what was collected in personal and corporate income taxes during the same year. Social Security is the most successful government program in our nation’s history. Through good times and bad, Social Security has paid out every benefit owed to every eligible American.

Who should we trust?

The rise of the 401(k), dating to the early 1980s, has steadily shifted more financial responsibility onto the shoulders of many Americans who are clueless.

Zee said...

@Denis--

Insofar as I'm aware, SS doesn't invest any money. It just collects the tax money, and turns it over to the general fund in exchange for Treasury IOUs.

No third parties involved to buy favors or special consideration from those who do the investing.

I trust SS. I wouldn't trust government investment in private entities for the reasons that I just gave.

Jay - Ottawa said...

Um, I think we’re all in agreement. Keep Social Security and make it even more solid by taxing the entire income of high earners.

Screw the idea of forced private retirement systems as a supplement to SS, to include 401-k and its related schemes, as well as the spurious Sperling proposal. Haven’t these private savings systems repeatedly served as a means to strip out the wealth of the middle class to feed the fat-cat manipulators at the top?

Finally, adopt a similar super-efficient system for health coverage. That is, drag every private health insurance company to the crossroads and drive a wooden stake through each of their caring hearts. Medicare can, in a multi-staged expansion by age cohort, take care of all ages efficiently and safely.

That would be a start in bringing about a reversal of economic inequality in America, in case you believe income disparity might be an issue worth addressing.

Haven’t we all agreed, despite Saint Ronnie's plaint, that government is not the problem? Just ask anyone receiving SS and Medicare.

How many ways can we say it? It’s the corporations, the neocon Pentagon and the bottomless economic costs of the security state, you bright pennies.

Denis Neville said...

The Social Security trust funds hold money not needed in the current year to pay benefits and administrative costs and, by law, invest it in special Treasury bonds that are guaranteed by the U.S. Government. A market rate of interest is paid to the trust funds on the bonds they hold, and when those bonds reach maturity or are needed to pay benefits, the Treasury redeems them.

The fallacy of the conventional wisdom has been that the answer to retirement security consists of even more tax subsidies and incentives for private savings. The majority of people nearing retirement will not have sufficient funds to retire with anything resembling economic security and comfort. The real crisis facing current and future retirees in America’s aging society is the failure of the private components, such as defined benefit pensions and 401Ks, of America’s mixed public-and-private retirement system.

This has made Social Security the most important source of income for most American retirees. Social Security is, by definition, an efficient program. About 98 percent of its costs go out in the form of benefit checks.

We can afford to augment the federal role in retirement saving and alleviate the problem of retirement insecurity. Ghilarducci makes the case against 401k plans, which benefits the financial services industry much more than investors. She advocates an alternative which would involve a retirement system run by the government rather than the private sector.

Defined benefit pensions are dying off. 401(k)s have a lot of undesirable instability. I retire comfortably in March of 2013, you retired wiped out in March of 2017.

The natural solution to the problems with individual retirement savings and defined-benefit corporate pensions is a large public sector program. Each working stiff takes home a bit less pay than he/she would otherwise have had, but in exchange he/she gets a guaranteed annuity when at retirement. We already have a program that’s more or less structured like that. It’s called Social Security. The natural and proper thing would be to rely more on Social Security as a means for ensuring adequate living standards for retirees.

James F Traynor said...

A scam is scam, is a scam and so forth. They've damn near got the millenials convinced and that's all they'll need. These kids and not-so kids have never invested a dime in their lives. Jeez, what a school of fish.

The only financial paper I ever trusted was Barron's; gave you pretty much the facts and figures, no bullshit, except for the editorials that were often at odds with the staff writers. The writers did a break down on SS investments vs. private funds years ago and found that returns were about equal with the private funds slightly ahead before you counted the fact that SS was also disability insurance.

I really hated delving into all that financial crap but it was necessary and I'm glad I did; we avoided a lot of angst as a result.

Pearl said...

Why Aren’t Israeli Journalists Questioning Their Military’s Devastation in Gaza? http://www.slate.com/articles/news_and_politics/foreigners/2014/07/israel_s_gaza_reporting_why_so_few_questions_about_the_war_and_palestinian.html?wpsrc=sh_all_tab_tw_top via @slate

Pearl said...

Malaysian air crash was not the fault of Putin http://shar.es/LW42P via @sharethis