Bankrupting Social Security to finance fascism
By Jerry Mazza
Journal Contributing Writer
Feb 26, 2005, 21:10
In 1935, the year Social Security was created, Sincliair
Lewis created his amazingly prescient novel, It Can�t Happen Here. In it, a Bible-quoting, folksy politician, Senator Buzz Windrip, backed by ruthless power
brokers, uses the democratic electoral process to make himself dictator. He
promises "a chicken in every pot" and then some to a country gutted
by civil unrest, racism, anti-Semitism, high unemployment, financial scandals,
and a fear of foreigners.
Lewis found his story model in 1933 Germany, in which an
explosive economic downturn fueled Hitler's thrust for power. This was
paralleled by Benito Mussolini�s rise to power in Italy. Both brutally
suppressed dissidents at home while they prepared for preemptive wars against
perceived enemies abroad. Ironically, Lewis�s story is seen and told through
the eyes of Doremus Jessup, a liberal editor and writer for his small-town
Vermont newspaper, The Fort Beulah
The Pulitzer Prize-winning Lewis wrote his story when the
United States and Western Europe had been in a depression for six years. In the
story, America is in the grip of a presidential campaign in which the populist
Senator Windrip fronts for a shadowy cabal intent on seizing the White House
for their narrow, self-interested agenda. His main adviser and soon-to-be
secretary of state, the ever-scheming Lee Sarason, could easily, eerily, be a
stand-in for Karl Rove.
Winning the election, the new administration immediately
ends crime in America by suspending civil liberties and having Windrip�s
reactionary Minute Men rounding up
everyone that objects. The story evolves into Windrip�s forming the fascist
political group, the Corporatists, or
Corpos, attacking, imprisoning and
murdering numbers of people who opposed them or are simply accused of
opposition, not unlike Hitler Brownshirts or Mussolini�s Blackshirts.
During this time, Doremus Jessup loses his paper for his
liberal opinions. In time, he joins an underground group, and is eventually
jailed for distributing "seditious" material that he�s written. He
endures beatings and torture in jail and horrific living conditions, yet
manages to survive and eventually escape, like the truth itself, and migrate to
Canada where he is taken in by friends.
During Doremus Jessup�s absence, the Corpos begin to
unravel. Sarason has Windrip deposed as president, claiming that he had been
embezzling the people�s money and was plotting with Mexico to avoid a war that
the administration wanted, not unlike the war the U.S. once wanted and was
prepared to lie to get with Cuba, as with Iraq and Vietnam. Sarason takes over
the presidency and has the vice president also exiled as a traitor to the
Then Lewis delivers another stunningly prescient turn of
plot: Sarason turns out to be gay and having gay sex orgies in the White House
with a cadre of hand picked younger men on his staff. And so the grim Secretary
of War, Dewey Haik has Sarason and his playmates murdered as they party,
assuming the presidency himself. In essence, the Corpos are beginning to
self-destruct after having nearly destroyed America. This, as Doremus Jessup
returns from Canada to the U.S. underground, to rejoin the fight against the
failing Corpos. The ending is left open-ended, like the future, like ours
The success of It
Can�t Happen Here as a novel led to its production as a play by the Federal
Theater (a project of the WPA). The play opened simultaneously in October 1936
in 17 in cities across the United States. By the election two weeks later over
500,000 Americans had seen it. After FDR was re-elected, Congress formed a
committee to investigate the play and its impact on the election.
As a result, Hollywood censors cancelled a film production
of the play planned for 1936. They were concerned it would be seen as an attack
on the Republican Party. At the time, Republicans more than Democrats opposed
anything that might lead to war with Germany. The committee also cut the
funding of the Federal Theater that originally produced it, bankrupting the
Ironically, Congress made the committee permanent, renaming
it the House Un-American Activities Committee, setting off a dark period of
Communist witchhunts and gave rise to Senator Joseph McCarthy, Red hunter
extraordinaire, and his assistant Roy Cohen who eventually was outed as gay and
who died of AIDS, as depicted in Tony Kushner�s Pulitzer-Prize winning play, Angels in America.
Both McCarthy and Cohen spent the better part of their
careers cynically looking under every bush for Reds, destroying careers and
lives by the handsful. Today George W. Bush rattles under the same bushes, nooks,
cranies and corners, seeking out terrorists, although his chief target, Osama
bin Laden, still seems to allude him.
At the very least, It
Can�t Happen Here is a fiction both strange and predictive of the kind of
reality in which we are living. It�s an example of an America gone amok in
authoritarianism, even if today it�s called Homeland Security or the USA
PATRIOTIC Act. Its lesson is something to carry with us, especially as Alberto
Gonzales� nomination was approved by a 60�30 margin in the Senate. Gonzales
stands ready to be an even more compliant attorney general than John Ashcroft
(if that�s possible).
As the president�s legal (or illegal) counsel regarding the
kind of torture prisoners being held in Guantamo, Afghanistan and Iraq could be
subjected to, Gonzales seemed to envision torture as nothing short of death
itself. One of the louder voices protesting Gonzales�s performance, at his
nomination hearing, came from newly elected Senator Barak Obama from Illinois.
He marveled at Gonzales�s lack of awareness or contriteness for his past bad
advice to Bush.
The Rub with Privatization
Then too Bush�s proposed "privatization" of Social
Security feels like something out of It
Can�t Happen Here, part of a systematic attempt to bankrupt and eliminate the
nation�s greatest retirement and social program to prop up an increasingly
speculative stock market and sagging economy. Privatization would require
borrowing up to $4.5 trillion, a low ball estimate, over the next two decades
to start some 155 million accounts. Add to that another $60-$70 billion
annually to administer those accounts by Wall Streeters and we are dancing with
financial disaster, public and personal.
Paul Krugman, in his 2/4/05 New York Times article "Gambling With Your Retirement,"
described privatization being " . . . in effect, as if your financial
adviser told you that you wouldn�t have enough money when you retire�but you
shouldn�t save more. Instead you should borrow a lot of money, buy stocks and
hope for capital gains."
Krugman adds, "If you put a piece of your payroll taxes
in a personal account, your future benefits will be reduced by an amount
equivalent to the amount you would have had to repay if you had borrowed the
money at a real interest rate of 3 percent." Got that?
As the Brookings Institution�s Peter Orszap says, "It�s
not a nest egg. It�s a loan." All the major papers reported that recently
in great detail. In fact, even before Bush�s State of the Union speech "a
senior administration official" made it clear the plan calls for you to
"borrow, speculate and hope." Ergo, we have a less than zero
improvement on Social Security, as we know it.
The lesson is you�re taking a loan from the government to
buy stocks with a 3 percent return on your investment. But, stocks don�t
perform, good luck, you lose. "If you invested your private account in
government bonds," as Krugman reports the official at the briefing made
clear, "you would face benefit cuts equal in values to your investment, so
you would be no better than under the current system."
And in truth, a financial adviser will tell you to plan for
retirement with a mix of stocks and bonds. They disapprove of borrowing to buy
stocks, or as it�s called on the Street, "speculation on margin."
Perhaps because the latter helped break the stock market in 1929. But Bush is
asking America�s those under 55 to do just that. And all this has nothing to do
with fixing Social Security to make it work even better.
As the senior official says, "In a long-term sense, the
personal accounts would have a net neutral ("no") effect on the
fiscal situation of Social Security." But it would have a negative effect
on your situation. It could deprive you of a significant portion of or all of
your Social Security benefits. In fact, the more you increase privatization,
the more you will need to pay for it with "slashed benefits." That
will come out of your retirement pockets. In the big picture, this is a way of
impoverishing senior Americans as you offer them a "bigger chicken in their
pot." But the truth is, a good piece of everybody�s chicken will be going
in the stock market pot to feed its ravenous appetite for cash.
Ironically, Bush has used Chile as an example of a country
that�s tried privatization. He didn�t mention this was implemented in 1981
under the notorious dictatorship of General Augusto Pinochet. The general, with
the help of the Nixon administration, Henry Kissinger and the CIA, was
responsible for the assassination of that nation�s democratically elected
president, Salvador Allende, ironically on September 11, 1973, in a bloody
military coup. On gaining power, Pinochet also instituted, with the help
of his American �friends,� Operation
Condor, a program of repression, political persecution, mass arrests,
summary trials, systematic torture and "disappearances," secret
executions and detention by death squads. So the big "It" happened
there as well.
During Pinochet�s 17-year run, some 3,000 people were
executed (after being brutally tortured) and some 30,000 brutally tortured, all
for the sake of ousting a democratically elected socialist with an unelected
brutal military regime that supposedly would bring "free enterprise"
There is a correlative story to this from oft-proposed
democratic presidential candidate, Lyndon LaRouche, in his article "Bush�s
Social Security Privatization: A Foot in the Door for Fascism." LaRouche
reports that stealing Social Security funds is a worldwide phenomenon. It�s not
only happening in Chile. Social Security and worker benefit plans are under
attack in Peru as in Mexico, Germany as well as France. LaRouche sees this
attack as conducted by the scions of bankrupt banking-systems to grab the large
social welfare funds of their governments. The United States is obviously one
of the players, which is why Bush has made it clear that his immediate,
number-one target is to "reform" Social Security via privatization.
In fact, Bush was the first sitting president in the 70-year history of the
program to seriously propose privatization. But he had some help.
In 2000, his friends from the reactionary Cato Institute
planted the privatization notion in Bush�s mind. This as noted in Richard
Institute: Anti-Capitalist Clique Leads the Attack on Social Security."
Freeman tells us that in 2001 the Cato Institute�s idea
blossomed into "Bush�s misnamed Commission to Strengthen Social Security
(CSSS). Its December 2001 final report called for Wall Street-administered
individual accounts outside of traditional Social Security, and for Social
Security retiree benefit cuts ranging from 10�45 percent. Cato ran the
commission, staffed it, and wrote some of its worst recommendations. But the
CSSS was presented to the public as a bi-partisan, independent commission
acting on behalf of the president. Also, consider the �constituency groups�
clamoring for privatization: the Alliance for Retirement Worker Security; For
Our Grandchildren; the United Seniors Association, etc. These were all directly
created by Cato; and members of their boards of directors and the senior staff
are Cato members or alumni."
The Cato Institute itself is the offspring of its present
president, Ed Crane, and Charles Koch, oil and energy fortune heir, the leading
figure of the notorious Mont Pelerin Society. The MPS was created in 1947, two
years after FDR�s death, in Lake Geneva, Switzerland, with the ideology of
radical free trade, unrestricted free-market speculation, deregulation,
monetarism and that financial aggregates, not men, rule society. So here you
have the wellspring of many of the neocon rants against government social
programs. This is also noted in Richard Freeman�s piece.
"[George Bush says he supports the dollar, but] he can't support the
dollar�he can not support the dollar. Not under the present
circumstances. Why? Because it takes $2 billion, coming in every day, from
outside the United States, to keep the U.S. dollar from collapsing�and it
is collapsing!� He added, �Now, that money is beginning to dry
LaRouche believes, and I agree, that Social Security funds
are needed now to absorb losses from the huge derivatives� bubble of the
financial markets. In LaRouche�s words, "The administration knows that
very soon, there is going to be a real avalanche that's going to hit the U.S.
financial market. They want to steal Social Security�they're going to steal all of it; not some of it. What they're
talking about is the shoe in the front door, but they intend to put the whole
foot in. Once they get the first step, then you will see, as they did with the
Iraq war, get the first step, get in there, and the whole thing comes."
That�s a tough example to turn your back on.
LaRouche�s words often sound like an update of It Can�t Happen Here . . ."Just as
the welfare issue was the issue,
which was key in Europe when Mussolini and Hitler came to power . . . we're faced
with a threat of dictatorship. And if we cannot mobilize political resources,
especially in the United States, to stop
this thing now, we will have given up our Constitution and our rights. And
when these guys come after us, they're going to come all the way�because they
are faced with a broken-down system, and they're going to go for a dictatorship.
. . .
"This . . . president is out to steal the Social Security of the American people. Not just a few
poor people. We're talking about the majority of the American people who will
be looted by this thing�and many will be
killed by it. When you combine this with the effect on the health-care
situation, people will be murdered,
by this kind of policy . . .
"On the face of it, the plan is Grand Theft of the sort
that makes Enron look like petty larceny. Bush is proposing to steal trillions
of dollars in hard-earned retirement funds to bail out a hopelessly bankrupt
monetary system. He's prepared to throw the old and sick on the scrap heap. And
the very same propaganda machine that brought you the Iraq war disaster is
already gearing up a new Big Lie campaign, to convince you that it is in your
interest to turn over your hard-earned retirement funds to the biggest gang of
Wall Street swindlers and fools ever to walk the planet.
"What Bush is planning to ram through is nothing less
than a full-scale fascist austerity regime, the Hitlerian kind that the
Synarchist bankers were unable to put in place in the U.S. in 1933, because of
Franklin Roosevelt, but were able to
install in Chile in 1973.
"That plan can be stopped again�as FDR did 70 years ago
. . . Americans can be mobilized to turn Bush's manic drive to privatize Social
Security, into his Waterloo . . .
"The fact is that the Chile privatization of social
security was never the bankers' main objective. The real prize was always the
United States. The very same cast of characters that orchestrated the Chile
project�a fascist coup to loot an economy into bankruptcy, and then to
resurrect the corpse and loot it again by stealing the social security
fund�this same crew is pushing the U.S. project today."
Another irony LaRouche points out is that, " the
Chilean Labor Minister who personally sponsored the pension fund heist was Jos�
Pi�era. Today Pi�era is a close advisor to Bush, and the leading spokesman for
the global Social Security privatization project, and has been for decades. He
functions out of the Cato Institute, and travels the world over promoting the
Chilean model of theft."
The Dark Shadow of George Shultz
Also, as La Rouche points out, " . . . Even more
significant is the role of George Shultz. Shultz has been there every step of
the way for the Chile project. From the Nixon Administration, he helped
orchestrate the Pinochet coup [with his friend Henry Kissinger]. And he
justified it on the basis of the University of Chicago economic policies, of
which he is a leading light."
Schultz soft-peddles his actions in his autobiography:
"General Augusto Pinochet came to power, bringing dictatorship and
repression to the political scene. But he did restore prosperity to the
economy. Chileans trained in free-market economics at the University of Chicago
applied the ideas of classical economics, opening the Chilean economy to
international competition, eliminating subsidies, relying on market signals to
direct investment, seeking fiscal balance and a stable monetary policy. These
policies worked." Worked how, and at what cost?
LaRouche also points out that "from his role as an
advisor to the incoming Reagan Administration in 1981, Shultz visited Pi�era
and asked the former Chilean Labor Minister to provide him with a one-page memo
on the pension privatization plan, for Shultz to try to sell the scam to
Reagan. Shultz's Chicago Boys in Chile
had barely implemented social security privatization there, and Shultz was
already trying to ram it down the throat of the U.S.�23 years ago!"
Remember that it was also Shultz who worked from 1971�73
with Nixon to unpeg the dollar from the gold-reserve system towards the
floating-exchange that has gone hand in hand with financial insecurity and
globalism. Treasury Secretary Schulz hammered the coffin nails into Roosevelt�s
protective gold standard in 1973 at an International Monetary Fund meeting, two
and a half weeks after Pinochet�s coup gave birth to Shultz�s "Chile model
of fascist economics for international export."
Today, Shultz is one of the senior luminaries of the George
W. Bush Administration. It is not surprising he�s still pushing to get his
policies through, personally and through the Cato Institute, which has provided
abundant financing for numerous "Social Security crisis" campaigns.
These included the writing of books, informational materials, and having Leanne
Abdnor, Cato stringer and VP for External Affairs from 1995 through 1998,
"educate" Congressional members and staff on the virtues of personal
retirement accounts in Social Security reform.
"The lesson should be clear," LaRouche warns.
"From 1971 on, the bankers' �Leporellos� [representatives of wealthy
oligarchic families] in the United States and elsewhere have known full well
that they must either junk their financial system, or move to �save� it with
global fascism. For the past 30 years they have sought to wipe out the
opposition to fascism . . . and to create the conditions under which a broken
American population would welcome its imposition, first in the rest of the
world, and finally, at home. After Sept. 11, 2001, they thought they had their
coup, but they have been unable to consolidate it, again in large part due to
the leadership of the resistance . . ."
Richard Freeman points out, " . . . the onrushing
financial collapse left Wall Street needing, and demanding more. On Feb. 17,
2004, the Cato Institute�s Michael Tanner, executive director of the
Privatization Project headed by Pinera, released the Cato reported entitled,
�The 6.2 Percent Solution: A Plan for Reforming Social Security.� [Previously
they were looking for 2 percent or one third of the 6.2 percent payroll tax for
private accounts.] The report asserted that all
of the 6.2 percent workers� payroll tax should be diverted into workers�
Individual Accounts, rather than into the Social Security system, and thence
into the stock market."
This plan is based on a very sharp benefit reduction that
the Social Security System would pay out to retirees.
Freeman also points out, "Finally, the plan drops the
bomb of default. Tanner states that according to his reading of the law, under
Social Security, �workers have no legally binding contractual or property right
to their Social Security benefits, and those
benefits can be changed, cut, or even taken away at any time.� (emphasis added) Tanner is cold-bloodedly arguing that
the government can default on the $1.5 trillion in Treasury bonds held by the
Social Security Trust Fund (Treasuries securities are the way that the Trust
Fund holds its surplus), and that the U.S. government can severely cut or
repudiate its Social Security benefit obligations to millions of elderly
citizens. Immediately after Bush�s re-election, Bush Administration officials
started regurgitating Tanner�s treacherous argument. Tanner et al are rabidly
fighting to get the Bush Administration to adopt Cato�s maximalist policy of
diverting the full 6.2 percent . . . into Individual accounts." The truth
is, as Freeman states, "The Social Security Trust Fund, in fact, holds
Special Obligation Treasury Bonds of the United States."
Freeman also answers Cato�s calling the Social Security Trust Fund a fraud . . ."Would one want to
publish that statement today in Chinese and Japanese, perhaps, and speculate on
the reaction in U.S. treasury debt?" I don�t think so, especially
considering the hundreds of billions in U.S. treasury debt each of those
LaRouche feels, "now . . . with George W. Bush's being
declared the winner of the Nov. 2 presidential elections, the Synarchist
bankers think they have the opportunity they've been waiting for. They are
wrong. Bush's manic drive to push through Social Security privatization may be
the biggest mistake of his political life�and lead to his downfall . . . This
may be the end of George Bush . . . because of this desperation to plunge ahead
with this swindle on Social Security."
Let�s hope LaRouche has the ending right. Certainly the
neocon story line, with Bush as protagonist, is no less strange than the plot
of Sinclair Lewis� cautionary novel. My caution is that we consider what�s
happening with the utmost sense of reality, even though it often seems like
fiction. We need to resist first and foremost both the erosion of Social
Security as well as our civil liberties, and secondarily, any cuts of social
welfare and education programs laid out in the new Bush budget. Remember he is asking $83 billion more for war. And that�s certainly not a
war on poverty.
Jerry Mazza is a freelance writer who resides in New
York City. Reach him at email@example.com.
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