Gray Matters: A Reach Too Far -- Who is Alan Simpson?

The Republican Obama picked to co-chair the so-called deficit reduction commission, former Sen. Alan Simpson, has been a harsh critic of Social Security and Medicare.
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This time President Obama, in his obsessive reaching across the political aisle, may have gone a stretch too far. For the Republican he picked to co-chair the so-called deficit reduction commission, former Sen. Alan Simpson, has been a harsh critic of Social Security and Medicare. And he sought to destroy their most powerful defenders, especially AARP.

That was 15 years ago, but as recently as 2005, Simpson, a conservative from Wyoming who left the Senate in 1997, supported attempts by President George Bush to privatize Social Security by turning part of the pension and insurance program into millions of individual investment accounts, which by now would have lost 20 percent of their value. Bush's plan failed, largely because of the opposition of AARP and other advocates that Simpson sought to discredit.

Even now, Simpson, who should know better, conflates or deliberately confuses Social Security's long term fiscal problems, which are minor, with its supposed contribution to the federal deficit, which is almost nil.

In an interview with the NewsHour after his appointment, Simpson said of Social Security, "You have two either raise the payroll tax or decrease the benefits or start affluence testing. The rest of it is B.S. And if the people are really ingesting B.S. all day long, their grandchildren will be picking grit with the chickens. This country is gonna go to the bow-wows unless we deal with entitlements, Social Security and Medicare."

His colorful language aside, what does one problem have to do with another? The Social Security trustees and the Congressional Budget Office have said the nearly $3 trillion trust fund will last for at least another 30 years. Former Federal Reserve Chairman Alan Greenspan said the projected shortfall after that is easily fixed for decades with a small raise (two percent split between employer and employee) in payroll taxes. Obama also minimizes Social Security's fiscal problem and suggests simply raising or removing the current $106,000 ceiling on salaries subject to the tax. Will his pledge to maintain Social Security as a pension program clash with Simpson?

But here's my point: Social Security long term fiscal problem has nothing, absolutely nothing, to do with Social Security's role in the deficit. For, as I have emphasized in my column for years, Social Security costs the budget not one cent-aside from the one percent it spends on its thousands of employees and field offices. Indeed, Social Security helps finance the deficit by loaning the treasury money, for which it earns interest (about $700 million a year.) If what's owed to Social Security must be cut as part of deficit reduction, will that help Social Security?

Nevertheless, Simpson's statements help perpetuate the myth among right-wingers that Social Security contributes to the deficit. Here is former Texas Rep. Dick Armey, chief organizer of the Tea Baggers and a longtime enemy of Medicare and Social Security: "If you're not courageous enough to look at mandatory spending, the two biggest components being Medicare and Social Security, then don't tell me you're serious about fighting the deficit."

Simpson's record in the Senate raises questions about his appointment: Did the president have any notion of his background of hostility towards the twin pillars of American social insurance? Has Simpson left his right-wing politics far enough behind? Can he be an honest broker when, say, advocates for Social Security and Medicare come before his panel? Here's why I ask.

In December 1994, when the Republicans were on the verge of taking over the House, the right-wing Capital Research Center, one of several relatively new think-tanks funded by prominent and wealthy conservatives, launched assaults on the Clinton administration and two major organizations that supported Clinton's failed efforts to pass health care reform and resisted Republican efforts to cut Medicare funds. The organizations were AARP and the labor-backed National Council of Senior Citizens (NCSC), which had played a major role in the 1965 passage of Medicare-over Republican objections. They were vulnerable because they held small federal contracts to train workers and also lobbied, which they were permitted to do.

According to consumer and medical affairs writer Trudy Lieberman in her book Slanting the Story, the conservative campaign took off when it was joined by Simpson, a rich rancher who was chairman of the Senate Finance subcommittee on Social Security and Family Policy. A rather goofy dilettante, he was about to announce his retirement and had nothing to lose so he took on his antagonists, especially the AARP, which had criticized him and lobbied against Republican efforts to slash Medicare funds and privatize Social Security.

According to Lieberman, "Simpson liked to tell stories about how he had to pay out of his pocket for his own parents' care and believed everyone should do the same." Simpson's father, Milward Simpson had been Wyoming's governor and a U.S. senator.

Using what Capital Research had found, Simpson wrote an op-ed column in the
conservative Washington Times in February 1995, attacking AARP's director, Horace Deets for criticizing the Republicans and charging that AARP was illegally using members' funds and the federal grants for lobbying. Simpson also resented the AARP's opposition to the pending Balanced Budget Agreement. AARP had run afoul of the IRS for mixing its royalty revenues with its nonprofit business and was forced to pay a fine and separate its profit and nonprofit ventures.

But with the help of the press and the network of conservative groups, Simpson's assaults -- and his hearings -- put the AARP and the NCSC on the defensive. The latter folded and reorganized as today's Alliance of Retired Americans. AARP's Deets retired and was replaced by a Republican, Public Relations Executive William Novelli, who had become friendly with House Speaker Newt Gingrich. Novelli, in 2003, stunned congressional Democrats when he threw AARP's support behind George Bush's private Part D drug program, which also provided huge subsidies for private Medicare Advantage plans.

Those plans, then called Medicare Plus Choice, became the first wedge in the privatization of Medicare in 1997. Under pressure from Republicans to slash Medicare funds, AARP was toothless, and Clinton agreed to allow private companies to sell insurance under Medicare. That was part of the 1997 Balanced Budget Agreement, which slashed more deeply than ever into Medicare and Medicaid funds and severely restricted the use of Medicaid for long term care.

The Balanced Budget Agreement, which did produce a one-year balanced budget, was shepherded through the Congress by Clinton's Chief of Staff, Erskine Bowles, now president of the University of North Carolina and the other co-chair of the Deficit Reduction Commission.

Write Friedman also writes for .

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