Monday, March 28, 2005

What are you looking at [tonight]? Can't do better than Giangreco and Berkowitz.

Pete Giangreco: You’re an economist. You understand. Risk and return. You always get a lower return for lower risk. Right? Social security is the bedrock. It’s worked for 70 years. They never missed a—

Jeff Berkowitz: Yeah. Almost a zero return and zero risk.
Tonight’s City of Chicago edition of “Public Affairs,” features Pete Giangreco, a Democratic Campaign consultant and partner at the Strategy Group []. The show airs throughout the City of Chicago at 8:30 pm on Cable Ch. 21 [CANTV]. Pistol Pete has worked on six Presidential campaigns and helped elect Governor Mark Warner in Virginia, Senator Barack Obama and Gov. Blagojevich in Illinois, and Pete currently does political message work for Illinois’ Governor and will no doubt work on Hot Rod's re-election campaign.
A partial transcript of the show with Giangreco is included, below. For an additional partial transcript of the show, hit the icon, Giangreco v. Berkowitz, to the right, above or below this blog entry.
Pete Giangreco debates and discusses with show host and Executive Legal Recruiter Jeff Berkowitz on tonight’s City of Chicago edition of “Public Affairs,” whether the national Democratic Party is “out of touch,” the Democratic Presidential possibilities of Senator Barack Obama [D-IL], Governor Mark Warner [D-Va], Governor Rod Blagojevich [D-IL], John Edwards, Senators John Kerry [D-MA], Hillary Clinton [D-NY] and Even Bayh [D-IN]; social security lockbockes, personal retirement accounts, insolvency and reform; the War in Iraq and the march towards democracy through-out the world; the Economy, Keynesians, deficits and tax cuts; Gov. Rod Blagojevich’s efforts to deal with state deficits, risky investment schemes and much, much more.
Pete Giangreco: …That’s the funny thing about the social security fix that the President is talking about. There are 10 or 15 ways to solve social security. We are only arguing about one of them, which is these-- this private accounts, this privatizing, which by the way will cost us two trillion dollars in new debt--

Jeff Berkowitz: we don’t know that; we don’t know that.

Giangreco: Which you can’t be for—and, it guarantees this, it will create another government bureaucracy—

Berkowitz: When you say cost, it takes people who have been paying into the system and gives them the control over their money—

Giangreco: Right—

Berkowitz: You are saying that is a cost—

Giangreco: No, no, no—

Berkowitz: Because people are now going to control their money, what you mean is—

Giangreco: We have to borrow two trillion dollars to make it work.

Berkowitz: Yeah, because you will no longer have a Ponzi scheme available where—we wouldn’t allow people to do this privately where we take money from somebody and we give it to somebody else as [a] return [on their investment]. So, we are going to interrupt that and we are going to have to borrow as we get away from a Ponzi scheme way of doing social security toward a system of investment—

Giangreco: Right.

Berkowitz: So, there actually would be money [in the personal retirement accounts];[in the current system] where you say there is [money], there isn’t.

Giangreco: No. No. There isn’t money. There is debt.

Berkowitz: And people would invest it [the money].

Giangreco: Wait, wait, wait. You can’t say debt on the one hand is not money, and now say, if we just borrow our way out of this, we will be fine. Look, what the president is saying—

Berkowitz: We are transitioning to—

Giangreco: What the President is saying to people is to go down to your Payday Loan store and pay a usurious rate [of interest] and borrow all of this money and then try to invest it in the stock market and try to make up the deficit.

Berkowitz: [pay a] relatively low rate [of interest]. It is not even so different from your boy, Rod Blagojevich, I say that with respect—the person you’ve worked for.

Giangreco: Um um.

Berkowitz: The candidate.

Giangreco: Um um.

Berkowitz: A year or two ago, he [Gov. Rod Blagojevich] said there was a problem. He had a major problem with the [state] deficit. He needed two billion dollars. So, he said—what we’re going to do is, we’re going to sell about 10 billion dollars in securities and we’re going to invest it [the funds received from the sale of securities] and we’re going to make more [8%] than we will have to pay out [5%] as a return on those securities. And so, we’ll book the two billion dollar savings [the difference between what we anticipate paying out and what we anticipate earning in the stock market] and the deficit is taken care of. That was Governor Rod Blagojevich and if he had been a Republican, you would have called that a risky investment scheme.

Giangreco: That’s the way all 50 states do it.

Berkowitz: So, it’s Okay?

Giangreco: No, No.

Berkowitz: But, it’s investing money—it’s investing money to make a higher rate of return than it [the funds] cost you. With social security, we make 1.3% and we know we could make [at least] 3 or 4 percent.

Giangreco: It’s not an investment program, Jeff—that’s why your—

Berkowitz: It is an investment program.

Giangreco: No, No, No, it’s an insurance program.

Berkowitz: No, but I am saying, they are trying to make it into an investment program.

Giangreco: It guarantees. It guarantees. Do you hear the word guarantee?

Berkowitz: It guarantees-- as long as the government is willing to raise taxes to pay for it. That’s no guarantee.

Giangreco: The other part of this program is why it doesn’t work. They aren’t personal accounts. You don’t control them. It’s not your money.

Berkowitz: Are you talking about the President’s proposal now or the way it [currently] is?

Giangreco: Yeah, the privatizing. The proposal is- you can’t take the money out—

Berkowitz: Personal Retirement Accounts.

Giangreco: You can’t take the money out and the government tells you what you can invest it in. And, you have to create a whole new bureaucracy.

Berkowitz: They put constraints on [how you can invest the funds], just as they do with 401 (k)s [accounts that individuals can use to place income from employers into, often matched by employers—without the contributions being taxed until withdrawn—which, in large part, is on retirement].

Giangreco: It’s going to be even more expensive

Berkowitz: Why is it Okay [to do that] for 401 (k)s, but not for this?

Giangreco: No, No, No because—

Berkowitz: Do people make money on 401 (k)s? Yes they do.

Giangreco: Because they are worried that people are going to lose money, that’s why there are constraints here, that’s the whole point.

Berkowitz: Same with 401 (k)s. You can’t justify 401 (k)s and not justify these things [personal retirement accounts].

Giangreco: You’re an economist. You understand. Risk and return. You always get a lower return for lower risk. Right? Social security is the bedrock. It’s worked for 70 years. They never missed a—

Berkowitz: Yeah. Almost a zero return and zero risk.
Pete Giangreco, Democratic Campaign Consultant, recorded on March 13, 2005 and as is airing tonight at 8:30 pm on Cable Ch. 21 [CANTV] on the City of Chicago edition of Public Affairs.
Jeff Berkowitz, Host and Producer of Public Affairs and an Executive Recruiter doing Legal Search, can be reached at