Tuesday, October 21, 2008

The quest to cut social security


The quest to cut social security
Advocates of cutting social security and Medicare in the US are using the financial crisis as a pretext to further their agenda

Wall Street investment banker Peter Peterson has been on long quest to gut social security and Medicare, the core social insurance programmes on which American workers depend. He recently endowed a new foundation with $1bn to pursue this end.

Peterson and his crew are hoping that the financial crisis will help him accomplish his goal. His foundation has lately taken to arguing that because of the money spent bailing out the banks, we must make cut backs in social security, Medicare and elsewhere. In reality this is just bad economics. The Peterson crew is either badly confused or deliberately trying to mislead the public to promote its agenda.

Before dealing with this issue, it is worth noting that Peterson has a long history of being wrong in a big way about major economic issues. For example, in the 1990s he argued for partially privatising social security as a way to increase benefits. If Congress had taken his advice, beneficiaries today would be receiving much lower benefits.

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