Wall Street uses the Third Way to lead its assault on Social Security

By William K. Black
(Cross-posted at HuffingtonPost.com)

Third Way, lobbyists for and from Wall Street who are leading the effort to enrich Wall Street by privatizing Social Security, was created by Wall Street to fool some of the people all of the time.  I have written previously to expose their fictional claims to be a moderate or liberal Democratic group.

Eric Laursen documented Wall Street’s effort to become even wealthier by privatizing Social Security in articles and his recent book (“The People’s Pension: The Struggle to Defend Social Security Since Reagan (AK Press)).

I showed that Third Way makes itself useful by providing a faux “liberal” or “moderate” “Democratic” quote machine that can be used to discredit Democrats and Democratic policies such as the safety net.  I gave examples of how Third Way gave aid and comfort to the effort to defeat Elizabeth Warren and the effort to unravel the safety net.  Third Way continues to prove that you can fool some of the people all of the time.

The National Journal ran an article on November 8, 2012 entitled “Left Divided over ‘Grand Bargain.’”

“Groups concerned with protecting entitlements such as Social Security and Medicare are finding themselves at odds over whether an overarching fiscal deal during Congress’s end-of-year session would help or hurt their cause.

The AFL-CIO organized a day of action on Thursday–part of a broader post-election campaign to protect entitlements–with dozens of events scheduled nationwide to urge lawmakers to avoid such a deal.

A ‘grand bargain’ to prevent the year-end onset of tax hikes and spending cuts ‘could cut Social Security, Medicare and Medicaid benefits, all to give tax cuts to the wealthiest Americans,’ the labor group argued on its organizing site. But the union campaign is being met with resistance from others on the left.

‘We, like you, are ecstatic about the reelection of President Barack Obama and what it means or American growth and prosperity,’ wrote Jim Kessler, senior vice president for policy for Third Way, a liberal think tank with a centrist approach, in an open letter to the groups involved with the day of action. ‘However, as fellow progressives, we were disappointed to learn that you will be leading an effort against the President to impede a balanced grand bargain.’

In order to protect safety-net programs, such as Social Security and Medicare, the left must embrace reform, Kessler writes.”

Let me attempt again to make the basic facts clear.  Third Way is not a “liberal think tank.”  It does not take “a centrist approach.”  It is not run by “fellow progressives.”  It is not concerned with “protecting entitlements.”  It is not even a “think tank.”  Third Way is a creature of Wall Street.  It’s version of “protecting” the safety net was made infamous during the Tet offensive in Viet Nam when the American officer explained that “it became necessary to destroy the village in order to save it.”  Third Way is the Wall Street wing of the Democratic Party, which seeks to defeat Democratic candidates like Elizabeth Warren running against Wall Street sycophants like Senator Scott Brown and seeks to unravel the safety net programs that are the crown jewels of the Democratic Party.  Wall Street’s “natural” party is certainly the Republican Party, but Wall Street has no permanent party or ideology, only permanent interests.  Third Way serves its financial interests and the personal interests of its senior executives.  Wall Street has always been the enemy of Social Security and its greatest dream is to privatize Social Security.  Wall Street’s senior executives live in terror of being held accountable under the criminal laws for their crimes.  They became wealthy by leading the “control frauds” that drove the financial crisis and the Great Recession.  This is why Wall Street made defeating Warren a top priority.

Third Way is run by a man who Laursen terms an “acolyte” of Pete Peterson.  Peterson is a Republican, Wall Street billionaire who has two priorities – imposing austerity on America and privatizing Social Security.  Privatizing Social Security is Wall Street’s unholy grail.  They would receive hundreds of billions of dollars in fees and ensure that their firms were not only “too big to fail,” but “too big to criticize” if they could profit from a privatized retirement system.   (We do not know who funds Third Way because it refuses to make its donors public.  Given who dominates its Board of Trustees, however, the donors must be overwhelmingly from Wall Street.)

Third Way’s self-description has some elements of honesty, admitting that it is “led by a prominent private sector Board of Trustees, drawn from finance, industry, academia, the non-profit sector and government.”  The order is revealing – the board is dominated by finance, with a thin veneer provided by industry, and with the barest patina of “academics” and “government.”

Here are key excerpts from their web site identifying their board.

·             John L. Vogelstein

Mr. Vogelstein is the Chairman of New Providence Asset Management, LLC and Senior Advisor to Warburg Pincus, LLC. [He co-managed that huge private equity firm.]

·             Bernard L. Schwartz

Mr. Schwartz is Chairman and CEO of BLS Investments, LLC.

·             David Heller

Mr. Heller … was … the Global Head of Equity Trading for Goldman Sachs.

·             Georgette Bennett

Dr. Bennett—an award-winning sociologist, criminologist, and journalist…. [Yeah criminologists!]

·             William D. Budinger

William D. “Bill” Budinger is the founder of Rodel, Inc., where he served for 33 years as its chairman and CEO.  [Rodel manufactured semi-conductors.]

·             David A. Coulter

Mr. Coulter serves as Managing Director and Senior Advisor at Warburg Pincus, focusing on the firm’s financial services practice.

Mr. Coulter retired in September 2005 as vice chairman of J.P. Morgan & Chase Co. He previously served as Executive Chairman of its investment bank, asset and wealth management, and private equity business.

·             Jonathan Cowan

Prior to co-founding Third Way, Mr. Cowan founded and ran Americans for Gun Safety….  In 1992, he co-founded Lead…or Leave, which became the nation’s leading Generation X advocacy group.  [He lobbied to protect “second amendment rights” to bear arms and led a Pete Peterson inspired group urging “Gen X” members to unravel the safety net.]

·             Lewis Cullman

Mr. Cullman was the Founder and President of Cullman Ventures, Inc., a diversified corporation that included the At-A-Glance group, which manufactures and markets diaries….

·             William M. Daley

William Daley served as President Obama’s Chief of Staff from January 2011 until January 2012.

Prior to his Chief of Staff role, he was Vice Chairman … of … JPMorgan Chase, from 2004 until 2011.

As Special Counsel to President Clinton in 1993, Daley coordinated the successful campaign to pass the North American Free Trade Agreement (NAFTA).

He was co-chair of the US Chamber of Commerce Center for Capital Markets Competitiveness.  [This is code for deregulation of finance.]

·             John Dyson

Mr. Dyson is Chairman of Millbrook Capital Management, Inc. (MCM), a private investment firm.

·             Robert Dyson

Mr. Dyson … is Chairman and CEO of the Dyson-Kissner-Moran Corp., a privately owned, diversified investment holding company….

·             Andrew Feldstein

Andrew Feldstein is the CEO and Chief Investment Officer of BlueMountain Capital Management….

Prior to co-founding BlueMountain in 2003, Mr. Feldstein spent over a decade at JPMorgan where he was a Managing Director and served as Head of Structured Credit; Head of High Yield Sales, Trading and Research; and Head of Global Credit Portfolio. [“High yield” is a euphemism for junk bonds.]

·             Brian Frank

Mr. Frank is a Director and Portfolio Manager at MSD Capital, L.P., the private investment firm founded by Michael Dell.

·             Michael B. Goldberg

Mr. Goldberg joined Kelso & Company in 1991 as a Partner and Managing Director.  [Private equity.]

·             Peter A. Joseph

Mr. Joseph has been in the private equity investment business for over twenty years….

·             Derek Kaufman

Derek Kaufman is Head of Global Fixed Income at Citadel LLC. He is a member of Citadel’s Portfolio Committee.

Prior to joining Citadel in 2008, Mr. Kaufman was a Managing Director at JPMorgan Chase….

·             Derek Kirkland

Mr. Kirkland is a Managing Director and Co-Head of the Global Financial Institutions Group at Morgan Stanley’s Financial Institutions Group in Investment Banking.

·             Ronald A. Klain

Ronald A. “Ron” Klain is President of Case Holdings, and General Counsel of Revolution LLC.  [Case is an investment fund for the holdings of AOL’s founder.]

·             Thurgood Marshall, Jr.

Mr. Marshall is a partner at Bingham McCutchen LLP, and a Principal of Bingham Consulting Group. Mr. Marshall counsels and devises strategies for advancing clients’ interests before Congress, the executive branch and independent regulatory agencies. [He is a lobbyist for a firm best known for representing financial firms.]

·             Susan McCue

Ms. McCue is President of Message-Global, LLC, a strategic communications and public affairs firm she founded in January 2008 to advance progressive campaigns, activism and issue advocacy in the U.S. and globally.

·             Herbert Miller

Mr. Miller, former CEO and Chairman of The Mills Corporation, one of America’s most innovative and successful mall developers and managers, founded Western Development Corporation (WDC) in 1967 and serves as its Chairman, Chief Executive Officer and Principal Stockholder.

·             Michael Novogratz

Mr. Novogratz has been President and Director of Fortress Investment Group LLC….. Prior to joining Fortress, Mr. Novogratz spent 11 years at Goldman Sachs….

·             Andrew Parmentier

Mr. Parmentier is a Founding and Managing Partner of Height Analytics. He and fellow Managing Partner John Akridge formed the company in January 2009. He has worked in the financial services industry since 1997….

·             Kirk Radke

Recognized internationally as one of the top private equity attorneys during his 28 year career at Kirkland & Ellis….

Among professional activities, Mr. Radke is Co-Chair & Organizer of the International Bar Association Private Equity Symposium, Founder of the Private Equity General Counsel Network, Founder of Legal Series and Co-Founder of the Private Equity Law Firm Roundtable.

·             Howard Rossman

Dr. Rossman is a President and Founder of Mesirow Advanced Strategies, Inc. and a Vice Chairman of its parent, Mesirow Financial Holdings Inc. He is responsible for all aspects of fund management, including manager due diligence, strategy analysis and asset allocation.

·             Tim Sweeney

Mr. Sweeney has been President and CEO of the Denver-based Gill Foundation since October 2007. For more than 30 years, he has worked to advance equality for all people regardless of sexual orientation or gender expression.

·             Ted Trimpa

Mr. Trimpa is a partner with the international law firm, Hogan Lovells LLP.

·             Barbara Manfrey Vogelstein

She has over 24 years of experience in venture capital and specialized equity investing. [S]he was a Partner of Warburg Pincus, one of the world’s largest private equity firms.

·             Joseph Zimlich

Mr. Zimlich is the Chief Executive Officer of Bohemian Companies, a group of family-owned real estate and private equity holdings.


Twenty of the twenty-nine trustees come from finance (counting the lawyer whose specialty is representing private equity firms).  Their most common background is Mitt Romney’s – private equity – and hedge funds.  The nine non-finance members include:

  • A Pete Peterson acolyte who previously created supposedly centrist front groups for gun rights and an effort to enlist “Gen X” in Wall Street’s assault on the safety net
  • A developer of giant malls
  • A semi-conductor manufacturer
  • A manufacturer of diaries
  • A criminologist/journalist
  • A PR specialist
  • A gay rights activist
  • A lobbyist at a firm best known for representing finance
  • A lawyer

The board includes three representatives of “main street” (malls, semi-conductors, and diaries).  They are not heavy hitters compared to the finance representatives.  On finance issues, Third Way is Wall Street.  It is run by Wall Street for Wall Street.  It is liberal only on social issues such as gay rights – and Wall Street created Third Way to focus on finance.

I have explained in other articles the incoherence and ineptitude of the financial policies that Third Way (including Casey, who temporarily left Third Way’s board to serve as President Obama’s chief of staff, where he urged Obama to adopt austerity and the Great Betrayal.  I have explained how those policies would have thrown the nation back into recession and doomed Obama’s chance for re-election.  Third Way has learned nothing from their errors – they continue to push the Great Betrayal and austerity.  Their overriding goal is to begin the process of privatizing Social Security.  The fact that their policies would cause a gratuitous recession, immense misery, and terrible electoral losses to Democrats does not represent a policy failure to Wall Street.  Wall Street would be the grand winner if we began to privatize Social Security as Third Way proposes.

The “left” is not divided on the need to oppose austerity and the Great Betrayal.  Third Way is not left or center or even right.  It is Wall Street on the Potomac.  Opposition to austerity and the Great Betrayal is not a left v. center issue.   Wall Street’s proposed financial policies are terrible for virtually all Americans.

15 responses to “Wall Street uses the Third Way to lead its assault on Social Security

  1. Quote,” They became wealthy by leading the “control frauds” that drove the financial crisis and the Great Recession. ”
    Please,please, after due examination and improvement, make this issue “The Single Most Important Path to Prosperity”.Or prove that it is a fool’s dream by “Justaluckyfool”

    ***Wealthy by leading the “control frauds”.
    The “control frauds” are:
    1. Allowing private for profit banks to issue currency.
    2. Allowing private for profit banks to charge interest on that currency they issue.
    These two “control frauds” may account for 90% of what is wrong with our present monetary system.
    YET, no new legislation is needed to eliminate them.
    It is a proven fact that the Fed can issue unlimited amounts of currency and not increase deficit spending. What have we learnt from the QE’s ???
    When the Feds make an asset purchase, (QE 3-a/k/a Infinity) at $90 billion per month,
    they claim no fear of hyperinflation, rather the fear is stagnation.
    Why not create a pool of $100 trillion as assets (LOANS) to banks and at the same time
    mandate they must be at 100% reserve ? A mandate that the Fed already has the power to declare.
    So as not to be very intrusive of your space, I beg that you consider:

    “QE 4 Disaste Relief”

    “QE 4 WAR”


    All based upon what I believe to be from writings by-

    William Black,

    Michael Hudson,

    and Frederick Soddy, “The Role Of Money”

    PLEASE, if only for the sake of one fool.

    • P.S. How to fix a “Too Big To Fail” Bank or financial institution ?
      How do you fix an uncomprehensible amount of credit expansion?
      How do you do that while at the same time lower taxes, increase non-deficit spending?
      Obama and Romney both had the answer yet both did not know HOW to do it.
      There must be a way to lower federal income taxes and raise greater revenues.
      THE SOLUTION: Make the financial institution solvent by lending them all the money needed to be solvent, while at the same time charge them interest at 2% for 36 years in order to control the quality and quantity of the currency. If $200 trillion is needed that would produce a revenue (income)
      “to the people”, “for the people” of $11 trillion per year.
      Would that satisfy, “Lower taxes and Raise Revenue ‘Somewhere else’ ” ?
      Why would you not want prosperity for yourselves and your children?
      Why would you not “use the most powerful force in the universe”
      for the betterment of MANKIND. The banks have proven just how powerful it is!

    • Bill Black has it backwards. All of the boys outside GS huddle bought all this paper and rating agencies gave it AAA because for yrs the way they sliced and diced the credit traunches worked see American Securitization Forum. The FASB which oversees and GAAP changed in Jan 2007 to force all of these owners of paper to mark to market. GS who was fined tens of millions more then once IMHO conspired with large hedge funds JP Paulson, G Soros, Kyle Bass, Jim Chanos, Ray Dalio. IF you were out of the huddle you lost — if in you won. THE ABX Index which was adm my Markit in London was est by GS among others. 2009 was not the finest and most profitable yr in GS history for nothing. DOJ did not prosecute because to prove they destroy the confidence of the USA credit system for profit would enhance one of the greatest melt downs in history. Nobody has put two and two together.

      Follow the money because the process of pricing credit was not new and did not cause undo risk but the manipulation of the credit markets allowed those in the cabal to make a fortune. ABX Index was a thinly traded collection of 22 thinly traded CDS. Surely one can guess JP Paulson unhappy with his trade or short paid GS $15m to develop an asset (see Abacus deal which GS paid a 500M fine for its part) which they then bought CDS to insure. Like a put the cds pays off big/goes up if the asset defaults). It is like building your neighbors house and then getting insurance on it and burning it to the ground. The domino effect they created allowed those in the huddle to make a real killing. Follow the money and you have the crooks. Just be aware many of these folks own the government as well. GAAP then forced the owners of these investments or MBS paper to use manipulated CDS used in the manipulated ABX Index use for FMV Accounting and mark to market. Then the cabal once starting the domino effect used REG SHO a loop whole at SEC which breached the SEC ACT of 1934 sec 17A to naked short these same institutions into credit down grades. LEH, Bear both referenced Naked SHORT selling allowed under REG SHO as the culpret for their ending. THIS was the real domino effect and why if you were in on the huddle you made a fortune. The cabal gave the answers to the exam to front men like Dr. mike burry and told him to close the fund down afterward. They artfully used public opinion to deflect attention away from the real cabal members. See “Inside Job” which was propaganda by Soros and JP Paulson to deflect and confuse the public. Go no further then reading Fortune Mag article on Hank Paulson meeting at lunch at Eton parks office signal to 30 hedge funds they could keep their short attack on GSE even with a dead cat bouce going. Did Hank Paulson x CEO of GS who walked with $500M have reason to destroy GS competition once and for all. Follow the money but don’t say the process of securtizing the debt was inherently evil. It was and should be a common practice in a healthy credit market. It was the domino effect manipulating GAAP changes to FMV accounting that was aided by the SEC REG SHO loop hole that allowed those in the huddle to make billions. The talking heads at CNBC and DOW JONES will spin and confuse attention away from the real crooks. IF history didn’t continue to repeat itself we would all realize the way they paid shills these journalist to spin public opinion for the cabal was the most amazing part of their plan.

  2. The silent majority here breaking the silence to say go get em Bill.

  3. It’s not helping that we let them keep using the terms “grand” and “bargain,” both of which sound like desirable things but which we know are not desirable by the great majority of the population.

    How about “sickly embrace”?

    How about “Monkey’s Paw”?

    How about “smallpox blankets”?

    Just not “Trojan horse” again.

  4. This is ‘naked capitalism’ (too big to fail and too big to criticize). This is a critical time for America and reasonable amount of Government regulation of financial institutions has now become unavoidable. This situation reminds one of Civil War of American history and much more tougher than ever actions are needed to save the Union. Excessive private sector involvement needs to be curtailed. Th walls of the Wall Street need to be brought within the limits acceptable to the common citizen.

  5. [“High yield” is a euphemism for junk bonds.]

    Actually, it’s quite the reverse. Many bonds labeled as “junk” have paid off handsomely for those willing to take a chance on them, which is as it should be. Risk should be rewarded.

  6. The Third Way – if it moves attach debt to it! Never mind the distortion (hidden tax) it causes in discovering value through genuine market processes. Between you and I we never did really believe in all that free market capitalism crap anyway. If we can capture government and get it to do our bidding that’s all that matters.

  7. We need to keep Social Security and Medicare financially viable.
    The FICA and SECA taxes are helpful to pay current benefits, but since 2010, there has been a shortfall.
    That shortfall was made up by redeemimg Treasury bond interest, which required new general revenues. It is the same way we pay for battleships.
    In effect, the trust fund principal and interest is no longer available, for it was loaned to the Treasury to pay for current expenses.
    We need some type of program in which the trust fund assets are paid-for, intact investments.
    I am not in favor of Wall Street taking over the trust fund, but I am concerned that the fund was loaned to the Treasury over the years.
    If we make adjustments, as in 1983, to increase the trust fund surplus, we need to make sure that surplus remains in the trust fund. If the Treasury is unable to leave the trust fund alone, then the citizens deserve a way to preserve their excess taxes.
    Currently, the trust fund is earning no interest, and its principal and interest are gone.
    This message has not been available to the public, and if it was, I am confident we would demand changes.
    Don Levit

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  10. Mr. Black infers that having any financial work history means that the board of trustees are Wall St. pawns, kind of like Warren Buffet and George Soros.
    Here is what their paper on Social Security Reform actually states:
    “We would then amend the Social Security benefits formula to slightly increase retirement payments for those with average lifetime earnings less than $55,000 a year, while slightly decreasing them for those who earned more. To build retirement wealth, there would be a new, deficit-neutral revenue stream to seed retirement accounts for workers younger than 30, so they can begin accumulating private savings early.

    We would also gradually increase the retirement age to 68 for today’s 38-year-olds and eventually set it at 70 for today’s 4-year-olds — with necessary hardship exemptions. This age change tracks increases in life expectancy and means recipients would, on average, receive benefits for 17.5 years — as they have since 1980. We would make adjustments in cost-of-living increases identical to those recommended by the president’s fiscal commission.

    And finally, on the revenue side, we would extend the payroll tax to those earning up to $190,000 annually — up from $106,800.

    This plan is likely to generate opposition from the left, though it strongly defends progressive values for decades to come. It makes Social Security fully solvent through the century, bumps up benefits for lower-income workers, encourages retirement savings and modestly increases federal taxation. Just as important, it leaves room in future federal budgets for crucial investments in education, innovation, infrastructure and research.

    Consider that in 1990, 44 cents of every federal dollar was spent on Medicare, Medicaid, Social Security and interest on the national debt. By 2030, according to the Congressional Budget Office, those four programs will eat up 68 cents of every dollar.

    That’s the budget of a nation unable to weigh in on behalf of children or economic growth. It is the reason that we must lower the current fiscal trajectory of future Social Security spending — not just extend and finance it.”

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  12. Thank you for the good writeup. It actually was once a entertainment
    account it. Look complex to far brought agreeable from you!
    By the way, how can we keep in touch?

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