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Unmasking the most influential billionaire in U.S. politics

The most influential billionaire in America is Peter G. Peterson, whose misleading campaign to 'reform' traditional social welfare programs has subtly set the terms of the Washington debate.

October 02, 2012|Michael Hiltzik

On the other hand, his connections can be hard to keep straight: In 2009, for example, the Washington Post published a news article talking up an ostensibly independent effort to create a bipartisan deficit-cutting commission in Washington. The piece included approving comments from Robert L. Bixby, executive director of the "nonpartisan" Concord Coalition. What wasn't disclosed is that the Concord Coalition was funded and co-founded by Pete Peterson, and that the article itself had been provided to the Post by Fiscal Times, the news outlet launched by, yes, Pete Peterson.

The avoidance of overt political partisanship enables Peterson to engage in something more insidious: economic partisanship. That's what makes it worthwhile to examine his approach to Social Security, Medicare and Medicaid, and how it has spread.

Peterson declined to be interviewed for this column. But his views on "entitlement reform" have been set forth in writing often, perhaps most clearly in a 1994 article in the New York Review of Books. There he praised President Clinton for his budget-cutting but damned him for promising Americans "broad new entitlements in health, employment, retirement and education." Peterson urged instead "putting an end to the vast and largely unearned windfall we now give to the more affluent half of all American households."

That prescription encompasses several feats of legerdemain. For one thing, most recipients of Social Security and Medicare have spent their lives earning the benefits through payroll taxes. For another, the fiscal issues faced by Social Security and Medicare are distinguishable — Social Security is not facing an immediate crisis and may not for decades; Medicare's crisis stems entirely from the externality of rising healthcare costs. Finally, "more affluent" is not synonymous with "affluent": the "more affluent half" of U.S. households in 1994 were those earning $32,000 or more, according to the Census Bureau. That would be $48,418 in today's dollars. Today, the median figure is about $50,000, which shows that the average American family hasn't progressed much over that time.

Nevertheless, Peterson argued that too much money was going to the "middle class." He defined that segment as households earning $30,000 to $200,000, "which, however, hard-pressed, cannot claim to be destitute." He observed that cutting off entitlement outlays to these recipients "would balance the budget, and would so with a comfortable surplus to spare."

Peterson still argues that the typical person bearing such cuts would scarcely feel them. In a video interview posted on the foundation website, he states, "A substantial part of these retirement payments go to people like me."

Well, not really. The $1.14 billion in Social Security payments that went to recipients earning $1 million or more in 2009 amounted to 17-hundredths of 1% of all benefits paid out.

Walker says Peterson has refined his approach to the deficit over time: "He's diversifying. He's funded things dealing with defense and other spending, and he recognizes now that healthcare costs are the main driver" of federal deficits. Walker, whose organization plainly remains part of the Peterson family circle (notwithstanding the bus tour), says that "it's flat not true that his desire is to slash the social safety net.... But he recognizes, as does any knowledgeable person, that you've got to reform those programs as part of a comprehensive grand fiscal bargain."

Walker's own initiative, like others carrying the Peterson imprimatur, properly acknowledges that fiscal responsibility requires tax increases as well as spending cuts, though people can argue in good faith about how to balance the two. But the hallmark of Peterson's worldview is to view social insurance programs such as Social Security and Medicare strictly as fiscal expense items, ignoring their roots as moral commitments to American citizens that cross generations and unite economic classes.

These programs form the warp and woof of the American fabric. Portraying them, as Peterson does, as "safety net" initiatives that have outlived their relevance for all but the most destitute Americans is an artful way of destroying their universal appeal.

The danger in the economic debate in Washington comes from treating our fiscal problems as if they spring from the structure of our emblematic public social insurance programs, when the truth is that ill-advised tax cuts and unrestrained military spending have played a more important role.

The shame of Washington, on the other hand, comes from the fact that almost every organization promoting the grand fiscal bargain in which those programs will be on the table has accepted, somewhere and somehow, money from Pete Peterson.

Michael Hiltzik's column appears Sundays and Wednesdays. Reach him at, read past columns at, check out and follow @latimeshiltzik on Twitter.

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