Friday, April 08, 2005

Terence Samuel on The National Debt

This week, President George W. Bush went to the Bureau of Public Debt, in Parkersburg, West Virginia, to make the point that there is no Social Security trust fund -- nothing there that can be really counted on. All it is, he said, was a bunch of IOUs. Parkersburg is a river town near the Ohio border, where the Ohio and Little Kanawha Rivers meet, and it is something of an irony that the one presiding over the largest explosion in federal budget deficits would use the Bureau of Public Debt as a backdrop for his plea for solvency in Social Security.

But the bureau may indeed serve as a confluence of many of the serious problems confronting the country over the long term: booming deficits fueled by wildly out-of-balance federal budgets and reckless, sometimes dishonest federal fiscal policy. This week in Washington, the GOP leadership in Congress is continuing its efforts to come up with a budget resolution for the next fiscal year, a blueprint of priorities that will also look out at the next five years. There is some question about whether they can come up with a deal that they can sell to the disparate and increasingly rowdy elements of their party.

The Senate and House plans reveal sharp ideological disagreements, and both plans differ in important ways from the president’s budget blueprint. In two of the last three years, Congress was unable to produce a budget resolution, the basic framework of how the federal government will spend and raise money. This year, the GOP has a lot of incentive to pull it off. A budget resolution will give them the opportunity to pass a lot of controversial initiatives [drilling in the Arctic National Wildlife Refuge and making tax cuts permanent] by a simple majority, since budget bills can’t be filibustered.

Without the budget resolution, those proposals face Democratic filibuster and will likely die. Regardless of how it is sliced and diced, we are looking at an annual deficit of $368 billion this year and a 10-year projected deficit on $1.35 trillion, according to the Congressional Budget Office. And none of these numbers include the cost of the continuing military operations in Iraq and Afghanistan.

The president’s suggestion in Parkersburg, that the $1.7 trillion in Treasury bonds held by the Social Security Administration is “not a pot on money to be drawn on,” is a scary proposition. It not only threatens the future of Social Security, but it also goes to the heart of the debate over the long-term health and viability of the national economy. Debt and deficits, colliding with the spiraling costs of entitlements -- Social Security, Medicare, Medicaid, farm subsidies, student loan programs -- may mean we are headed for desolate economic shoals.

Newsweek’s Robert Samuelson envisions it as an “and economic and political death spiral.”

And when one considers how deficit concerns dominated the politics of the 1990s, it is remarkable how sanguine we are faced with the current situation. Remember that giant sucking sound? It has fallen quiet. The first President Bush agreed to a $500 billion deficit reduction plan that required him to raise taxes, breaking a no-tax pledge that may have cost him his presidency. But he may have made it easier for Bill Clinton to go down the same road two years later, in 1993, when he negotiated another $500 billion deal to reduce the deficit over five years. That solidified Clinton’s reputation as a good economic steward and may have saved his presidency later.

And in 1994, it was largely over concern about the size of the federal government that allowed the Republicans to take control of Congress. Deficits politics turned to surplus politics, making it easier for George W. Bush to get his record-level tax cuts.

These days, there is nothing on the table worthy of the name “deficit reduction,” but there is growing concern. Conservative GOP budget hawks in the House -- embarrassed by the tarnish that the deficits puts on their reputation as the party of smaller, cheaper, more responsible government -- have been challenging their leadership to more aggressively address the deficit problem. The comptroller general of the General Accounting Office, David Walker, has been saying the solvency problem in Social Security is essentially a small stream headed for a much bigger river.

“First, [Social Security’s] financial challenge is a subset of our nation's financial and fiscal challenge,” Walker told a House tax panel recently. “Social Security has an estimated unfunded commitment in current dollar terms for the next 75 years of $3.7 trillion. … That compares with a roughly $43 trillion problem for our country.”

So the problem is not just that Social Security may not be able to mail out monthly checks someday in the distant future but that, more perilously, the federal government may find itself so mired in debt that the whole economy just slowly grinds to a halt.

Walker says that without significant reforms we could end up with a federal budget almost entirely committed to interest payments. “[W]e could be doing nothing more than paying interest on federal debt in 2040 if we don't end up engaging in some fundamental reforms of entitlement programs, mandatory spending, discretionary spending and tax policy,” he says.

If we assume the Treasury issues are the same as a trust fund, because they are backed by the U.S. government, then the real problem with Social Security is almost a half-century away.

If there is a question about the reliability of those bonds down the road, then you are talking about a larger set of problems: There may come a time when the federal government might not be good for its IOUs.

“Four years ago, the Bush administration inherited a projected 10-year budget surplus of $5.6 trillion,” says House Minority Whip Steny Hoyer. “Since then, we have run record deficits of more than $400 billion a year, and Congress has been forced to increase the national debt limit three times. Even worse, the administration and Congress have no real plan to rein in deficits and debt. This threatens our investments in issues important to our communities -- on everything from health care to our national security.”

Walker made an interesting point when he recently appeared before the House Ways and Means Committee: The Social Security Trust Fund has IOUs because the Federal government spends, every year, hundreds of million of surplus payroll taxes collected for Social Security. These days, that means the federal deficit looks smaller that it actually is. In 2008, those surpluses begin to dwindle.

“And since Congress has, for a number of years, spent every dime of the surplus on other operating expenses,” said Walker, “that means it will increasingly put additional pressure on the balance of the federal budget starting in 2008.”

That’s about the time an almost-62-year-old George W. Bush heads back to Texas to begin his retirement and, sooner or later, to start cashing those Social Security checks.

The day Bush was sworn into office in 2001, the national debt was $5.7 trillion, and there was a surplus. On the day he showed up in Parkersburg, it had climbed to $7,782,816,546,352.29. That is seven trillion, seven hundred and eighty-two billion, eight hundred and sixteen million, five hundred and forty-six thousand, three hundred and fifty-two dollars, and twenty-nine cents.

But it’s just an IOU.

Terence Samuel is the chief congressional correspondent for U.S. News & World Report. His column about politics appears each week in the Prospect’s online edition.

Copyright © 2005 by The American Prospect, Inc. Preferred Citation: Terence Samuel, "$7,782,816,546,352.29", The American Prospect Online, Apr 8, 2005. This article may not be resold, reprinted, or redistributed for compensation of any kind without prior written permission from the author. Direct questions about permissions to

Life's Little Ironies Intrude Upon Deon Gouws.

The New Eldorado - and Sometimes the Nightmare - of South African Mercenaries
By Fabienne Pompey
Le Monde

Thursday 07 April 2005

For Deon Gouws, a forty-three-year-old former policeman, it was supposed to be his last contract: four months in Iraq to act as bodyguard for major personalities. However, the mission ended in a nightmare. Deon Gouws lost his right arm, his left eye, and his toes. Since he's been back in South Africa, he has only one objective: to dissuade South Africans from leaving for "that hell."

Like others, Deon Gouws had been recruited by word-of-mouth. Former colleagues, who, like him, had quit the ranks of the police after the end of Apartheid, had put him in contact with Erynis, a private security company. He left with 17 compatriots on January 8, 2004. He was, he says, responsible for an American general's security.

He stayed only twenty days. January 28, at dawn, an ambulance filled with explosives blew up the Shaheen Hotel where he was lodged with five of his South African colleagues. The friend who shared his room died instantly. Seriously wounded, Deon Gouws was evacuated to Germany.

"To Go There Is Crazy"

"It was a 250 kg bomb, a huge thing," he relates. The former Pretoria police sergeant knows what he's talking about. During apartheid, he worked for Vlakplaas, a secret entity known for its brutal methods, murders, tortures, and attacks. At the Truth and Reconciliation Commission, Deon Gouws acknowledged having killed at least fifteen people and having blown up between 40 and 60 houses of anti-Apartheid militants. He obtained amnesty.

"This war is not ours," he says today with regard to Iraq: "Over there, you're a target every second. It's hell. To go there is crazy." He gets phone calls every day from people who want to know how to go there, and he tries to dissuade them. But nobody listens to him. "They have only one motivation: that's money, money, always money," Deon continues.

Since he left the police in 1996, the former sergeant has received a pension of 5,000 Rand (650 Euros) a month; in Iraq, he was paid 10,000 dollars (7,700 Euros). "We are thousands in my situation, who came out of the police or the army. We can't live on our pensions," explains Deon Gouws.

He asserts that at least 4,000 South Africans have had a contract in Iraq, for several months, sometimes for a year. Some even make return trips. According to the South African Institute of Security Studies, there are 1,400, but these are only estimates. Many are former Apartheid hatchet men: they've fought in Namibia or tracked African National Congress "terrorists."

But there are also young men like 29-year-old Heinrich Visagie, killed April 7, 2004, in Falluja. He came from the Special Task Force, an elite police unit, many of the recruits of which, once trained, leave for Iraq. Companies like Erynis or Meteoric Tactical Solution (MTS) are suspected of widely recruiting in South Africa. "They know that we're good at this kind of work," explains Deon."And less expensive than a Briton, who gets paid twice as much for the same work."

South Africa has forged an inexpugnable reputation for itself as a holding tank for mercenaries. After the end of Apartheid, many soldiers and police officers converted themselves into "war dogs," operating all over the continent from Angola to Sierra Leone.

The principal employer then was the South African company Executive Outcomes, which, after having dominated the mercenary market, closed in 1999. Many of its men were recruited by the company, Sandline International, created by former British Colonel Timothy Spicer. Sandline, grown famous after many problems, notably in Sierra Leone, has officially ceased its activities, but has been recreated under the AEGIS appellation. AEGIS obtained one of the biggest security contracts in Iraq from the Pentagon in 2004. Today, AEGIS is a mainstay of the "private military security" market in the world.

More discreet, Erynis has removed its coordinates in South Africa from its Internet site. According to the South African press, it won a 39.5-million-dollar contract to train 6,500 Iraqis in security and to assure the surveillance of oil wells and other strategic sites.

Their local representative asserted a few months ago that he was not recruiting, except for "advice in security matters for companies working in Africa." Recruitment is done directly by Erynis offices in Jordan or Iraq.

Anti-Mercenary Law

Since 1998, South Africa has an anti-mercenary law on the books, the Foreign Military Assistance Act, but its enforcement appears to be difficult. In seven years, only three people have been tried. The first two, including a Franco-South-African who worked for Ivory Coast president Laurent Gbagbo, were condemned to pay fines of 2,600 and 13,000 Euros. The third is Mark Thatcher, son of Margaret, fined 380,000 Euros for having participated in the financing of an attempted coup d'état in Equatorial Guinea.

Deon Gouws does not believe he is affected by this law and asserts that he was unaware of its existence when he left for Iraq. "I'm not a mercenary. I wasn't there to participate in combat. We were only paid to protect people," he says. The law punishes all forms of military assistance to one side of an armed conflict, but also advice, training, personnel recruitment, or even medical and para-medical services. It also prohibits "security services for the protection of people involved in an armed conflict or the protection of their property."

The law as it was written in 1999 includes enough loopholes to prevent its enforcement. In March, the defense minister declared Iraq "a theater of armed conflict" and announced that South Africans working there would be prosecuted. However no prosecution has ensued. According to National Police spokesperson Sally de Beer, an investigation is under way against one company and several individuals. Nothing has been completed.

"We will review the law on foreign military assistance to discourage those who try to benefit from a conflict and from human suffering, as in Iraq," President Thabo Mbeki declared in February during his Speech to the Nation. The new version of the law is ready, the Defense Ministry indicates, and must be submitted to Parliament.

Just Why did We Go to War, Again?

The WMDuh Report
By Eric Alterman, The Nation
Posted on April 8, 2005, Printed on April 8, 2005
Were it not for the tens of thousands of dead and wounded, the billions wasted, and the hatred and terrorism inspired, the report "The Commission on the Intelligence Capabilities of the United States Regarding Weapons of Mass Destruction" would be almost funny. After all, did we really need a $10 million, 14-month, 600-plus-page investigation to tell us that the country was taken to war on the basis of a nonexistent threat? What might have been helpful would have been a genuine accounting of how the system was gamed in order to produce phony arguments and suppress the counterevidence. After all, for all his hurt feelings on display before the report was released, does anyone think Colin Powell would have given radically different testimony to the world at his famous February 2003 U.N. speech if the single drunken defector who was his main source had offered another perspective, one Powell and his bosses didn't want to hear? What if "Curveball" (or as Maureen Dowd aptly termed him, "Goofball") had echoed what Powell originally knew but conveniently forgot -- that, as the secretary explained in Cairo in February 2001, Saddam Hussein "has not developed any significant capability with respect to weapons of mass destruction. He is unable to project conventional power against his neighbors." Would anyone in the administration have cared what this unreliable drunk said? What of the many, many intelligence experts who warned, pre-invasion, that the data were being manipulated by hawks in the Pentagon and the vice president's office? Did anyone listen to them?

Bush says today that he would have invaded Iraq even if he knew then what he knows today. This investigation is therefore a farce -- designed once again to shift responsibility from the people who demanded corrupt intelligence to serve their ideological obsessions to those who were forced to provide it.

Our political process has become so degraded that the commissioners themselves can admit that they were forbidden from examining the one issue that still matters. As commission co-chair Laurence Silberman explained, "Our executive order did not direct us to deal with the use of intelligence by policy makers, and all of us were agreed that was not part of our inquiry." The New York Times's Todd Purdum noted a passage of the report in which its authors come close to admitting that the problem was not with the providers of intelligence but with the consumers: They complain that the President's Daily Brief was understood to require "attention-grabbing headlines" and that a "drumbeat of repetition," says Purdum, quoting the report, "left misleading impressions, and no room for shadings. 'In ways both subtle and not so subtle, the daily reports seemed to be "selling" intelligence,' the commission found, 'in order to keep its customers, or at least the First Customer, interested.'"

This passage reinforces two important lessons about contemporary uses of U.S. intelligence. One: The First Customer requires his information to be provided to him with "no room for shadings" as they may exist in, say, the real world. And two: In order to get Bush to pay attention, the intelligence had to be cooked up to agree with his beliefs. Given this, we might as well ditch our entire intelligence system, because unless it simply regurgitates the president's pre-existing prejudices, the information it contains will be ignored, rewritten or both.

Much of the coverage of the report -- which was, perhaps via divine intervention, drowned out by the deaths of Terri Schiavo and Pope John Paul II -- gesticulated in the direction of this fundamental truth before returning to the agreed-upon story line that Bush was very, very angry about the fact that he received bad intelligence that led him to invade a country that presented no threat whatever and made him out to be a liar to the rest of the world. He was so mad, in fact, that the only person deemed to be responsible for this massive failure, former CIA director George Tenet, was given the Presidential Medal of Freedom, the nation's highest civilian honor. (Everybody else involved was punished with a promotion and a raise.)

Yet even in the most critical reports of this phony whitewash, one aspect of this shameful episode went by largely forgotten: the media's willingness to publicize, vouch for and frequently hype the dishonest case the Administration put forth. I am not speaking just of Judith Miller's willingness to act as unpaid propagandist for the Pentagon, breaking the Times's own reporting rules on its front page in order to mislead its millions of readers. Rather, just about every bigfoot in the business signed on for this bad-acid trip across Bushland. I refer again to a devastating study by former Des Moines Register editorial page editor Gilbert Cranberg of the immediate reaction of the press to Powell's channeling of Goofball at the United Nations, which should serve as a cautionary example to any reporter who ever again takes this administration at its word. Despite the fact that Powell cited almost no verifiable sources and included more than 40 vague references to "human sources," "an eyewitness," "detainees," "an al Qaeda source," "a senior defector," "intelligence sources," his words were treated as if the reporters present had personally witnessed God handing him the evidence on tablets atop Mount Sinai. Powell offered up, we were told in our finest newspapers: "a massive array of evidence," "a sober, factual case," "an overwhelming case," "a smoking fusillade ... a persuasive case for anyone who is still persuadable," "an accumulation of painstakingly gathered and analyzed evidence," "an ironclad case ... incontrovertible evidence," "succinct and damning evidence ... the case is closed."

And yes, this is the same press attacked by Bush supporters as too liberal, too cynical and too "elitist" to give a Republican conservative a fair shake. In a more just universe, the right-wingers would stop whining and give reporters the credit they so richly earned. I mean if the guy in charge of providing all this crappy intelligence deserves a Presidential Medal of Freedom, don't the people who parroted it back deserve a little lovin' too?

© 2005 Independent Media Institute. All rights reserved.
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Un-Embed The Media Amy and David Goodman

Un-Embed the Media
By Amy Goodman and David Goodman, AlterNet
Posted on April 8, 2005, Printed on April 8, 2005
This originally appeared in the Baltimore Sun on April 7.

Recent revelations that the Bush administration has been fabricating news stories, secretly hiring journalists to write puff pieces and credentialing fake reporters at White House news conferences has infuriated the news media.

Editorials profess to being shocked -- shocked! -- by the government's covert propaganda campaign in which, as The New York Times revealed March 13, at least 20 federal agencies have spent $250 million creating and sending fake news segments to local TV stations.

But the media have only themselves to blame for most people -- including TV news managers -- not being able to distinguish journalism from propaganda. The line between news and propaganda was trampled not only by the public relations agencies hired by the government but also by reporters in the deserts of Iraq.

The Pentagon deployed a weapon more powerful than any bomb: the U.S. media. Embedded journalists were transformed into efficient conduits of Pentagon spin. Before and during the invasion of Iraq, the networks conveniently provided the flag-draped backdrop for fawning reports from the field.

As if literally adopting the Pentagon's propagandistic slogan -- "Operation Iraqi Freedom" -- for their coverage weren't enough, the networks bombarded viewers with an unending parade of generals and colonels paid to offer on-air analysis. It gave new meaning to the term "general news."

If we had state-run media in the United States, how would it be any different?

The media have a responsibility to show the true face of war. But many corporate journalists, so accustomed by now to trading truth for access (the "access of evil"), can no longer grasp what's missing from their coverage. As CBS' Jim Axelrod, who was embedded with -- we would say in bed with -- the 3rd Infantry Division, gushed: "This will sound like I've drunk the Kool-Aid, but I found embedding to be an extremely positive experience. ... We got great stories and they got very positive coverage."

It should come as no surprise that the Bush administration, having found the media so helpful and compliant with their coverage of the Iraq war, would seek to orchestrate similarly uncritical coverage of other issues that they hold dear.

TV viewers nationwide have watched and heard about how the "top-notch work force" of the often-criticized Transportation Security Administration has led "one of the most remarkable campaigns in aviation history," how President Bush's controversial Medicare plan will offer "new benefits, more choices, more opportunities," how the United States is "putting needy women back in business" in Afghanistan, and how Army prison guards, accused of torturing and murdering inmates in Iraq and Afghanistan, "treat prisoners strictly, but fairly."

Such crude government-supplied propaganda would be laughable were it not being passed off as news on America's TV stations. Even sadder, nothing about the sycophantic reports seems out of the ordinary.

The first casualty of this taxpayer-financed misinformation campaign is the truth.

Mr. Bush must have been delighted to learn from a March 16 Washington Post-ABC News poll that 56 percent of Americans still thought Iraq had weapons of mass destruction before the start of the war, while six in 10 said they believed Iraq provided direct support to al Qaeda.

Americans believe these lies not because they are stupid but because they are good media consumers. The explosive effect of this propaganda is amplified as a few pro-war, pro-government media moguls consolidate their grip over the majority of news outlets. Media monopoly and militarism go hand in hand.

It's time for the American media to un-embed themselves from the U.S. government. We need media that are fiercely independent, that ask the hard questions and hold those in power accountable. Only then will government propaganda be seen for what it is and citizens be able to make choices informed by reality, not self-serving misinformation. Anything less is a disservice to the servicemen and women of this country and a disservice to a democratic society.

© 2005 Independent Media Institute. All rights reserved.
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Death By Design: The Plot to Destroy Social Insurance

Our nation’s political leaders are looting the federal treasury and they expect ordinary citizens not to notice. Last week’s coverage of the release of the Social Security and Medicare Trustee’s Report proves one thing about contemporary news: Those who control the mic, control the sound byte…and our perception of reality.

Despite the Trustee’s report clearly showing the more immediate financial problems facing the Medicare program – which they projected will become insolvent in the year 2020 – most mainstream news sources focused on the Trustee’s less dramatic Social Security estimates which moved up the date at which the trust fund is expected to be “exhausted” from 2042 to 2041.

How has it come to pass that we are actually facing a short-term crisis in Medicare but the nation is fixated on the more distant Social Security shortfall? More importantly, how does this bait and switch tactic obscure the likely impact of Medicare’s financing problems on the millions of African American elderly, disabled, and poor people who rely on the program as their only source of health care?

We can’t blame “Medicare Myopia” on the Trustee’s report which clearly relayed that the system would need an immediate 107 percent increase in income (tax increase) or an immediate 48 percent decrease in outlays (benefit cut) in order to bring its financing into balance. We could, however, look to how the report was released for clues as to why many media sources overlooked the most important part of the story.

Ironically, out of six total Trustees only the four members serving in the Bush Administration participated in the report’s release. And they – perhaps knowing that the media would focus on their spoken words instead of reading the report – chose to focus their remarks almost exclusively on Social Security.

But the stark nature of Medicare’s financing problem, its relationship to Medicaid, and the reliance of African Americans and other vulnerable populations on these vital programs, (see "Structured Inefficiency: The Impact of Medicare Reform on African Americans,” Rockeymoore) means that it is critical to move beyond mainstream sound bytes and headlines to figure out what is really going on.

The Medicare Slight of Hand

When the Medicare Prescription Drug, Improvement, and Modernization Act was signed into law by President Bush in December of 2003, many fiscal conservatives expressed outrage that the Administration and their Congressional counterparts would ignore their party’s philosophical tradition of fiscal conservatism that called for relieving taxpayers of “unnecessary” burdens, particularly entitlement programs like Medicare, by shrinking big government.

So when President Bush and Congressional Republicans pushed through a historic expansion of Medicare to include an uncapped prescription drug benefit, health savings accounts, and huge subsidies for Health Maintenance Organizations (HMO) and Preferred Provider Organizations (PPO), it came as a nasty surprise to fiscal conservatives who were dismayed at the estimated $400 billion price tag reported at the time.

Many political observers inside and outside the beltway assumed the push for expanded prescription drug benefits represented an election year ploy to attract or neutralize senior citizens, a reliable voting bloc, and to make good with pharmaceutical companies and health maintenance organizations who would likely respond in kind with generous campaign donations.

It seemed a distracting curiosity when it was revealed that the Administration went to great lengths to hide the true cost of the bill prior to its passage – threatening to fire Medicare’s chief actuary Richard S. Foster if he revealed his higher cost estimates of $500 billion to $600 billion to Congress.

The ante was raised in early February of 2005 when the White House finally acknowledged that the actual cost of the Medicare drug benefit would reach anywhere from $720 billion to $1.2 trillion in its first decade of operation alone – more than double the cost of the original estimates.

Now that we see the Administration’s approach to Social Security privatization and examine it in light of its contorted approach to the Medicare bill, it may be that the election-year motives originally ascribed were too simplistic in hindsight. For a pattern is emerging that may very well signal a more ominous plot to destroy the social insurance nature of Medicare and Social Security.

Privatizing Social Insurance

A simple analogy may help us understand the nature of the issues our country is facing. When the Jackson family’s spending habits showed that soon they would be unable to pay their bills, family members worked more hours (found additional income) and ate oatmeal in place of steak (trimmed expenses) to prevent financial ruin. If the Jackson’s had ignored their looming fiscal insolvency and instead decided to purchase a Ferrari and an Olympic-sized swimming pool, they were certain to default on their mortgage and lose their home.

Like the Jackson family, Medicare’s Hospital Insurance (HI) trust fund was already facing a long-term inability to meet its financial obligations due to rising health care costs and reduced tax revenue caused by the recession when the 2003 Medicare legislation was enacted. Instead of generating additional revenue or trimming expenses to place Medicare on a solid financial footing, the Administration and Congress bought a Ferrari, swimming pool and an island in the South Pacific – in effect, adding prohibitively expensive programmatic expenditures in the form of an uncapped drug benefit that enables pharmaceutical companies to charge seniors and the government as much as they like and massive subsidies to prop up HMO’s that have already proven their inability to provide consistent, quality care for seniors.

As a result, passage of the Medicare legislation sped up the date at which the program would be unable to pay full promised benefits by seven years – from 2026 to 2019. (The latest Trustees report pushes this date back one year to 2020.)

So what is the real reason why conservatives disregard their fiscally conservative political base to add expensive program features that are not sustainable? It is highly probable that they are setting Medicare up for failure and building the case for privatizing all social insurance programs within the next 10-15 years.

This theory would sound conspiratorial except for the fact that we now see a similar pattern emerging in the Social Security debate. Basic facts are the same: the Trustees estimate that Social Security will face a long term funding shortfall in the year 2041. Instead of addressing the shortfall, the Administration proposes to create expensive private retirement accounts that add huge financial burdens to the system that cannot be sustainable in the long term.

Like Medicare, the Center for Budget and Policy Priorities estimates that the addition of private retirement accounts, expected to cost 4.9 trillion over two decades, would accelerate the date of Social Security’s insolvency by about eleven years – from 2041 to 2030.

Once social insurance programs have imploded under the weight of their fiscal pressures, the Administration schemes leave an escape hatch for privatization. In the case of Social Security, they will simply transition individuals completely into private retirement accounts – making them solely responsible for shouldering the burden and risk of meeting their retirement needs through private savings and stock market investments. Under this scenario, Social Security’s survivor and disability benefits – if maintained – become dramatically reduced and morph into means tested, welfare-like programs that depend upon general revenue transfers to stay afloat.

In the case of Medicare, the privatization escape hatch are the Health Savings Accounts and the HMO’s/PPO’s that received such favorable and prominent treatment in the 2003 legislation. Touted as a new way to help Americans save for future health needs, the Health Savings Accounts will likely be expanded in a future where individuals are expected to carry a heavier financial responsibility for their health care. Similarly, the 2003 Medicare law expanded the role of private insurers by providing them with government subsidies and other benefits to give the illusion that they are more efficient when compared to the traditional Medicare program. Thus, setting the stage for the elimination of Medicare.

In either scenario, it doesn’t take a rocket scientist to project the type of arguments that will be made as the looming date of insolvency approaches for both programs and the nation buckles under the weight of the costs. In early March, Federal Reserve Board Chairman Alan Greenspan gave us a glimpse of them when he reportedly warned House Budget Committee members that benefits promised under Social Security and Medicare were unsustainable and would cause severe economic consequences for the economy if not retooled. What did Greenspan identify as his preferred alternative to social insurance? Private individual accounts.

Impact on African Americans

There is no doubt that the destruction of Medicare would have drastic consequences for African Americans of all ages – but especially black seniors and many with disabilities who also rely on Medicare for health coverage.

Medicare has had a particularly positive impact on the quality of life for African American seniors. Prior to the program’s implementation in 1966, African Americans received substandard treatment in segregated hospital facilities when they received treatment at all. By requiring hospitals to prove they weren’t practicing racial discrimination in order to receive federal funds, however, the Medicare program served as the catalyst that enabled older African Americans to receive equal access to affordable health care coverage. It is important to note that since the passage of Medicare life expectancy has increased by 20 percent.

Today, reflecting historical education and labor market inequities, African Americans are more likely to be among Medicare’s lower-income beneficiaries. According to the Kaiser Family Foundation, while 40 percent of all Medicare beneficiaries have incomes below 200 percent of the federal poverty level, 65 percent of African American seniors fall below this level. As a result of their lower economic status, African Americans are also more likely to rely on Medicaid to supplement their Medicare coverage. (See , Rockeymoore, February 10, 2005.) Black seniors are also twice as likely as whites to lack employer-sponsored supplemental health insurance. Complicating matters is that African American seniors are much more likely to be in poorer health and to report having one or more chronic health conditions.

So, facing all of these complex challenges, what will happen to African American seniors or those who are disabled when Medicare is replaced with a privatized system of health care coverage? It is likely that we will return to a pre-1966 two-tiered system where large swaths of the population will be unable to afford access to health care. Unfortunately, Medicaid won’t be there to help these people since the Administration is intent on also slashing that program’s funding.

Thus, this scenario will likely result in even shorter life expectancies for African Americans. But perhaps that won’t matter either, since Social Security won’t be there to provide them with guaranteed income support in old age if the Administration is successful in its privatization efforts.


In sum, it is clear that the Administration is following the tenets of its own version of the ownership society: give away the federal treasury to the “have and have mores” by bestowing tax cuts on wealthy individuals, huge subsidies for wealthy HMO’s, no-bid contracts for wealthy defense firms, and large transfers to wealthy Wall Street money managers hungry for Social Security payroll taxes. Perhaps it is the height of irony that an Administration that came into office with historic surpluses is striving to leave office with a legacy of having set the stage for bankrupting the nation’s two premier social insurance programs – successfully mismanaging taxpayer’s money and trust in the process.

Dr. Maya Rockeymoore is currently Vice President of Research and Programs at the Congressional Black Caucus Foundation. Previously serving on the Social Security Subcommittee of the U.S. House of Representatives Committee on Ways and Means, she is the co-editor of Strengthening Communities: Social Insurance in a Diverse America and author of The Political Action Handbook: A How To Guide for the Hip Hop Generation.

FERC has dictatorial powers now?

FERC's Wood Questions Energy Bill Language On LNG Authority
Intelligence Press 4/7/2005
FERC Chairman Patrick Wood, who announced Wednesday that he will be departing the agency at the end of June, told reporters this week that he's not sure that current language in pending comprehensive energy legislation dealing with the siting of liquefied natural gas (LNG) facilities is "helpful."

In a press briefing at FERC headquarters related to news of his departure, Wood said that the proposed legislation "has a much broader state role than currently exists today, which I think can be used to effectively veto expansion of LNG infrastructure." Lawmakers in the House of Representatives this week began marking up a comprehensive energy bill.

"The main thing we wanted -- and this is what Rep. [Lee] Terry did in his bill -- was actually say the FERC's job is exclusive. Exclusive jurisdiction over LNG permitting, which was kind of a clean, clear, crisp thing that totally addressed the California PUC litigation, but that's not in this bill. The one thing we wanted is the only thing that's not in there," Wood said.

U.S. Rep. Terry, a Republican from Nebraska, earlier this year re-introduced legislation aimed at fostering meaningful expansion of the nation's capacity to receive LNG (see Daily GPI, Feb. 1). The bill mirrors legislation the House lawmaker introduced last May (see Daily GPI, May 21, 2004).

Terry's measure would place jurisdiction for the siting of LNG import terminals with the Federal Energy Regulatory Commission, ending existing jurisdictional conflicts. It also would do the following: make FERC the lead agency for carrying out environmental reviews of LNG projects; clarify the role of states in the siting, construction, expansion or operation of LNG import terminals; set a deadline of one year for review of LNG terminal applications; allow FERC to set a schedule for completion of all federal and state administrative proceedings related to an LNG project; and codify a FERC ruling exempting LNG terminals from the agency's open-access requirements.

The California PUC has challenged FERC's LNG-related jurisdiction in the courts. "Just in case we don't win that case, we would want to have something that reverses a potential decision," Wood said this week. "It's hard to do. Legislators aren't real keen on trying to guess what a court case is going to do until after it's played its course. I understand that. I've certainly been on the other side of that argument."

In an appearance before NGI's 19th annual GasMart conference in New Orleans last month, FERC Commissioner Joseph Kelliher said that the "biggest threat" to the development of new LNG import terminals in the U.S. is the CPUC's challenge to FERC's jurisdiction in this area (see Daily GPI, March 18). (Copyright 2004 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.

Sunrise, Sunset, Ashes & Dust for Campobello?

Campobello panel against LNG plan
Friday, April 08, 2005 - Bangor Daily News


CAMPOBELLO ISLAND, New Brunswick - Officials at this island's international park said Thursday they do not want an LNG facility in their back yard. Their pronouncement comes in the wake of a vote in Perry last month where residents expressed a like feeling.

Meanwhile the Passamaquoddy Tribe and a would-be Oklahoma developer of the proposed facility at Pleasant Point are assessing their options.

The Roosevelt-Campobello International Park Commission said it opposed the development of an LNG treatment and transshipment facility at Pleasant Point, immediately adjacent to the international border with Canada.

Emily Francis, the tribe's public relations spokeswoman, said Thursday she was surprised the commission had taken a stand at this late date. "Why are they coming out against it now?" she said. "We got turned down in Perry. We right now are taking a step back and looking at all of our options, we don't have a plan in place right now."

The commission, which met for the first time this year, sent a letter to Secretary of State Condoleezza Rice outlining its concerns.

The park was established in 1964 by a treaty between the United States and Canada. The 2,800-acre park is on Campobello Island, near the border with Lubec. The park's main attraction is the historic summer home of U.S. President Franklin Delano Roosevelt, who vacationed on Campobello with his family over a period of 56 years beginning in 1883. On average nearly 130,000 people visit the park between May and October.

The former president's grandson, Christopher, who is chairman of the commission, said Thursday that the group, made up of six Canadian and six Americans, voted after careful consideration. "A statement and all of the supporting information was prepared and circulated to the commissioners, it was thoroughly discussed at the meeting last Saturday and the commission voted to support the statement and get it moving as quickly as possible," he said.

Asked what the commission would do if the project moved forward, Roosevelt said, "when we get to that bridge we will see how it is best crossed."

A ship would pass close to the island on its trip to the LNG terminal. In its statement, commission officials said safety was a major consideration.

"It is clear from analyzing the various safety reports available from both U.S. federal sources and private independent institutions that the heat alone from any fire or explosion involving an LNG tanker in transit to or from the proposed terminal would immediately render to ashes much of the shoreline vegetation and structures on northern and western Campobello Island, the island's most populated areas, including the park's shoreline buildings and the historic Roosevelt cottage," they said.

The commission said that the explosion of any LNG tanker has been compared to 55 Hiroshima nuclear bombs.

They also asked the Canadian government to restate its policy against the involvement of tankers through Head Harbor Passage and said that Canada views the waters concerned as "internal waters" and therefore not subject to limitations of sovereign action such as might be implied by the doctrine of "freedom of innocent passage."


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