Budget Hawk John Spratt and the “Grand Bargain” on Social Security
John Spratt, Chairman of the House Budget Committee, was recently appointed by President Obama to the Debt Commission. I’ve been going through documents looking at his history regarding Social Security reform, and his involvement in “secret meetings” in 1997 authorized by Clinton Chief of Staff Erskine Bowles. Bowles was at the time negotiating a deal between Clinton and Newt Gingrich that included partial privatization of Social Security.
Last week at the Pete Peterson confab, Bill Clinton spoke openly about the secret agreement he reached in 1997 with Newt Gingrich to take money out of Social Security and place it in private accounts — something Wall Street has been demanding in order to keep the bubble from bursting. The deal was the subject of the 2008 Steven Gillon book The Pact: Bill Clinton, Newt Gingrich, and the Rivalry That Defined a Generation.
According to Gillon, Clinton agreed to take the political heat for privatization, and the plan only fell through when the Monica Lewinsky affair exploded and Clinton was afraid to take the hit in the polls.
Gillon interviewed Erskine Bowles for the book. “Both Clinton and Gingrich had complete faith in Bowles” he says, noting that Bowles was the lynchpin of the deal and served as liaison between the two men. Clinton initially reached out to Bill Archer, the Republican head of the Ways & Means Committee, while Bowles contacted Gingrich. “They both believed that any effort to update Social Security would require government to incorporate some measure of choice, and that meant some form of privately managed account,” writes Gillon. He says the key players in these talks were “Clinton, Gingrich, Bowles, White House congressional liaison John Hilley, and Bill Archer.”
Bowles was appointed by Obama as Chairman of the Debt Commission.
Gene Sperling, who served as economic advisor to both Clinton and Obama, also wrote about secret Social Security meetings in his book The Pro-Growth Progressive: An Economic Strategy for Shared Prosperity. Sperling says that he was party to the talks, as was John Spratt:
In 1997 Clinton Chief of Staff Erskine Bowles skillfully got an agreement to let OMB director Frank Raines, legislative director John Hilley, and me, along with Democratic congressional budget chiefs Congressman John Spratt and Senator Frank Lautenberg, negotiate in confidence with Republican chiefs Pete Domenici and John Kaisch. Because we were assured that what was said in the room stayed in the room, we could explore options knowing Clinton and the congressional leadership of both parties would support the final agreement.
It’s unknown what position Spratt took in those talks. But around that time, in April of 2008, the Charlotte Observer covered a speech by Spratt before the Rock Hill Chamber of Commerce (Lexis):
Spratt favors supplementing Social Security with a private savings plan that would either be mandatory “or else so attractive that everyone would sign up for it.” He also advocates investing about 20 percent of the Social Security trust fund in the stock market.
Spratt subsequently fought against George Bush’s privatization efforts, and proposed “lockboxing” Social Security and Medicare surpluses to pay down the debt.
But since that time, Spratt has indicated that he’s open to cutting Social Security benefits as a way to balance the budget. Early in 2009 Robert Kuttner wrote in the Washington Post that Pete Peterson was helping the White House in that effort, as were “leading ‘blue dog’ (anti-deficit) Democrats such as House Budget Committee Chairman John Spratt of South Carolina and his counterpart in the Senate, Kent Conrad of North Dakota.” Kuttner said that “the deficit hawks are promoting a ‘grand bargain’ in which a bipartisan commission enacts spending caps on social insurance as the offset for current deficits.”
Put Spratt down as “open to Social Security benefit cuts” and a history of support for some type of privatization.