Bush Social Security Commission Members: Who Are They?

Members committed to benefit cuts, privatization

Commission Co-Chairman Parsons Sued By Department of Labor for Denying Pensions to Time Warner "Permatemps"

On May 2, President Bush appointed a Commission that will recommend details to privatize Social Security. The White House handpicked the members of the Commission, representing organizations ranging from Wall Street investment firms to the right-wing, libertarian Cato Institute. In the words of Ari Fleischer, White House Press Secretary, they all “share the President's view that personal retirement accounts are the way to save Social Security.”

Privatizing Social Security, however, comes at a high price: steep benefit cuts, a higher retirement age, more government debt, greater financial risk, and increased poverty for the most vulnerable. Following is a brief profile of each Commission member.

Co-Chair: Richard Parsons, AOL Time Warner Co-Chief Operating Officer
Richard Parsons has a proven track record as a corporate executive willing to undermine the retirement security of his employees. Parsons managed a "permatemps" system at Time Warner where many employees were falsely classified as temporary workers or independent contractors. These workers did not get the same benefits – including pensions and employer contributions to Social Security – as other Time Warner employees. In 1998, the Department of Labor sued Time Warner on behalf of these employees, forcing them to pay $5.5 million in back-compensation through a settlement reached in 2000.

Co-Chair: Daniel Patrick Moynihan, Former Senator
Moynihan once was a defender of Social Security; he now advocates a position that combines a return to pay-as-you-go with substantial benefit cuts and partial privatization. For example, Moynihan's bill S. 21 (1999) would have:

• Permanently reduced the annual inflation-adjustment for benefits by one percentage point, which can result in a benefit reduction as much as 20-30 percent for a longer-lived retirees, the disabled, and their dependents.
• Reduced benefits across the board to replicate raising the retirement age eventually to 70.
• Reduced the payroll tax from a combined employer-employee rate of 12.4 percent to 10.4 percent by 2029, but then would have increased the rate until it reached 13.7 percent in 2060.

Sam Beard, Cato Institute / Economic Security 2000
Sam Beard sits on the board of the right-wing, libertarian Cato Institute's Social Security Privatization Project and is the president of his own pro-privatization organization, ES2000. The ES2000 proposal for financing privatization is to raise money by taking away some or all Social Security benefits for current beneficiaries except those in absolute poverty and giving them 30-year government bonds in exchange. In January 1999 testimony to the Senate Budget Committee, Beard added “I have submitted a back-up paper which outlines the main choices which reduce future benefits as a means of financing savings accounts…These include amending bend points, raising the normal retirement age, adjusting CPI inflation rates, and slowing the calculation for real wage growth.”

Carolyn Weaver, American Enterprise Institute
Carolyn Weaver served on the 1994-1996 Advisory Council on Social Security, and was the prime architect of the most radical of its two personal account privatization plans. Her plan would have diverted forty percent of Social Security revenues (5% points of FICA) into investment accounts. Because of the massive hole these accounts created in Social Security, however, her plan went on to:

• Reduce Social Security benefits for future retirees to a flat, sub-poverty rate of $410 (1996 dollars), a benefit cut of more than half.
• Reduce disability benefits by twenty percent.
• Increase the payroll tax by 1.52 percentage points for 72 years.
• Increase federal borrowing by $2 trillion (1998 dollars).

Tim Penny, Cato Institute / former U.S. Representative
Tim Penny serves on the board of the right-wing, libertarian Cato Institute's Social Security Privatization Project, where he is also a fellow. In a 1996 Cato Institute policy report, Penny wrote "the reforms I once proposed to save Social Security – raising the retirement age and limiting COLAs – should be implemented to contain the costs of the system as we phase in a privatized system."

John Cogan, Hoover Institution
John Cogan served in the Reagan Administration Office of Management and Budget. Earlier this year, Cogan was quoted as saying that the money to pay for the privatized accounts could come out of the Social Security surplus that is building up for the baby boom generation: “Right now, if you look at the next 10 years, one could allow individuals to invest 25% of their payroll taxes into PRAs without jeopardizing benefits paid to current retirees” (Investors Business Daily, 02-27-01).

Thomas Saving, TexasA&M
Thomas Saving is a public trustee of Social Security and Medicare. He has acknowledged that moving to a system of privatized accounts will impose a harsh penalty on many people. “It's good in the end, but during the transition to the new, better world, somebody is going to be worse off. Who that somebody is makes a big difference” (Corpus Christi Caller-Times, (07-03-00). In 1995, when Saving was director of the Private Enterprise Research Center at Texas A&M University, he wrote in an article advocating complete privatization, “Strange as it sounds, we must destroy the social security system, as we know it, to save it” (http://www.tamu.edu/perc/oct_1995.htm [1]).

Fidel Vargas, Reliant Equity Investors
Fidel Vargas was once the mayor of Baldwin Park, CA, but now works for an investment firm. He also was a member of the 1994-1996 Advisory Council on Social Security, and supported the most radical of its two personal account privatization plans (crafted by Carolyn Weaver). That plan would have diverted forty percent of Social Security revenues (5% points of FICA) into investment accounts. Because of the massive hole these accounts created in Social Security, however, the plan went on to:

• Reduce Social Security benefits for future retirees to a flat, sub-poverty rate. of $410 (1996 dollars), a benefit cut of more than half.
• Reduce disability benefits by twenty percent.
• Increase the payroll tax by 1.52 percentage points for 72 years.
• Increase federal borrowing by $2 trillion (1998 dollars).

Estelle James, World Bank
Estelle James has long promoted public-pension privatization from her perch at the World Bank. Her efforts to influenceU.S. policy about Social Security privatization have included writing reports for right-wing think tanks such as the Heritage Foundation and testifying to Congress. Along with Robert Pozen, she served on a conservative commission (Center for Strategic and International Studies) that recommended privatization – financed by raising the retirement age, reducing spousal benefits, and severely lowering the benefit payments to middle-income retirees.

Robert Pozen, Fidelity Investments
Robert Pozen runs a $450 billion financial services company that could make billions in profits annually from the privatization system that Pozen will recommend through his service on this commission. Along with Estelle James, he served on a conservative commission (CSIS) that recommended partial privatization – financed by raising the retirement age, reducing spousal benefits, and severely lowering the benefit payments to middle-income retirees.

Robert De Posada, Hispanic Business Roundtable
Robert De Posada and HBR have proposed a privatization plan that is fairly specific about the size and nature of the investment accounts – but fails to grapple with the question of financing the investment accounts, saying only that “transition costs must be spread evenly and fairly across generations.”

Olivia Mitchell, Wharton School
Olivia Mitchell is perhaps the only independent expert on the panel, although she supports privatization and raising the retirement age. Mitchell co-authored a 1998 paper directly refuting the most prominent claim put forward by the Bush White House, that Social Security provides a poor rate of return and that private accounts could do better: “A popular argument suggests that if Social Security were privatized, everyone could earn higher returns. We show that this is false...the net advantages of privatization and diversification are substantially less than popularly perceived.”

Gerald Parsky, Aurora Capital Partners
In addition to being Chairman of a large financial firm, Parsky was chairman of the Bush California presidential campaign. He was Assistant Treasury Secretary under Ford, and his name was floated as a candidate for G.W. Bush's Treasury Secretary.

Robert Johnson, Black Entertainment Television
Robert Johnson has a limited record around retirement security issues – although he has been involved in a protracted dispute with entertainment artist unions over his refusal to pay fair wages or contribute towards benefits – including pensions – for the comics on BET’s show “Comic View.” He is also involved in a significant effort to create a new airline, DC Air, which requires regulatory approval from the Bush Administration.

Gwendolyn King, Marsh and McLennan
Gwendolyn King, a former Commissioner of Social Security under the first President Bush, serves on the board of Marsh and McLenna, a financial services firm.

Bill Frenzel, Former U.S. Representative
Bill Frenzel is a former Republic representative from Minnesota. He is co-chair of the Committee for a Responsible Federal Budget (with Tim Penny).

Prepared by Hans Riemer, Senior Policy Advisor

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