Maybe CBS Evening News anchor Scott Pelley was so awestruck by a chance to visit one of the seven trading floors over at Goldman Sachs, and by a rare interview opportunity with Goldman’s CEO, that he forgot about good, skeptical follow-up questions. He and the CBS Evening News get a CJR Dart for this fairly embarrassing effort.
Pelley reported: The “so-called fiscal cliff is a time bomb, according to Lloyd Blankfein, chairman and CEO of Goldman Sachs, and one of the world’s most influential bankers. His message to Washington: Make a deal.” In other words, reduce the federal budget deficit.
OK. How would Blankfein do that?
You’re going to have to undoubtedly do something to lower people’s expectations—the entitlements and what people think they’re going to get, because it’s not going to—they’re not going to get it.
Wow! That’s direct. The next logical question was, well, why?
But all Pelley managed to ask at that point was “Social Security, Medicare, Medicaid?” as if reaffirming that all three programs are on the chopping block in the mind of one of the world’s most influential bankers. They were. Blankfein elaborated:
You can look at history of these things, and Social Security wasn’t devised to be a system that supported you for a 30-year retirement after a 25-year career…So there will be things that, you know, the retirement age has to be changed; maybe some of the benefits have to be affected; maybe some of the inflation adjustments have to be revised. But in general entitlements have to be slowed down and contained.
“Because we can’t afford them going forward?” Pelley volunteered, which prompted Blankfein to respond: “Because we can’t afford them.”
By now we’ve become used to weak reporting on Social Security from CBS, having critiqued its omissions, missing explanations, lack of context in three recent posts (see Related Stories below). So we weren’t too surprised.
Still, it did seem reasonable for CBS to push back a little on Blankfein’s arguments about how much Social Security we can afford. One approach would have been to report on how much of our GDP is spent on the program—a comparison sometimes employed in healthcare coverage, but for some reason almost never in press accounts about Social Security, the country’s largest and most popular entitlement. As we pointed out a few weeks ago, the US spends 5 percent of GDP on Social Security. By comparison: In 2000, Germany spent nearly 12 percent of its GDP on old age, survivor, and disability benefits. Germany seems economically healthy, too.
Instead, Pelley used up airtime with a few more superlatives about Goldman, which he called “one of America’s most successful investment banks,” with “ net earnings of $4.4 billion dollars last year.”
Another approach would have been to add a little economic history and context. The US is a far richer country than it was in 1935 when President Roosevelt signed the Social Security Act, and richer than it was in 1965, when Congress created Medicare. “It’s hard to figure out how we could afford to take care of our old people in 1937(sic) and 1965 when our country was one-quarter or one-half as wealthy as it is today, but can’t afford to do so today,” noted Jim Naureckas on the blog of FAIR, the liberal media advocacy group. The question is a good one.
Blankfein’s assertion that Social Security was being used to support Americans after a 25-year career also needed an X-ray. Social Security’s retirement benefits are based on a worker’s career average wages from at least 40 years of work. In calculating the average, the five lowest years of earnings are disregarded, but wages from the remaining 35 years are counted—even in years when the worker earned no money. In that case, a zero is used in calculating the average.
So what is Blankfein talking about here? Twenty-five years after you enter the workforce at, say, 22, puts you at 47. Who gets Social Security retirement benefits at 47? Nobody.
Cute little post at BJ which contains the links to get to the heart of this push:
http://www.balloon-juice.com/2012/11/26/over-the-fiscal-cliff-for-those-people/
From James Kwack:
"So the real point isn't that we can't afford Social Security and Medicare. It's that some people don't want to pay the higher taxes necessary to maintain Social Security and Medicare. This is a question of distribution, pure and simple.
At first blush, it may appear that young people don't want to pay for retirement benefits and health care for old people. But most of us will be both young and old at different points in our lives, so we're on both sides of the transfer. The real issue is that Social Security and Medicare are risk-spreading programs, which means that rich people** end up subsidizing poor people.
When people say that we can't afford our entitlement programs, they're really saying that rich people won't pay the taxes necessary to sustain our entitlement programs. To be fair, many rich people probably would be willing to pay higher taxes if they knew the facts. But a small number of extremely rich people have successfully spread the myth that we can't afford our entitlement programs."
But there's another angle to this, abstract in the Lee Atwatery sense:
"Of course, later race and gender barriers to entitlements were far less explicit. Between 1960 and 1980 when the full retirement age was 65, black men could theoretically qualify for benefits, but the average life expectancy of an African American male was roughly 62 years old. So Blacks would pay into the program their entire lives and die before they could take any substantive advantage.
Then in the 1980s, when Black male life expectancy had finally increased to 65, it was decided that entitlements needed an overhaul and the age of full retirement was raised to 67.
Currently, Black male life expectancy is finally at 70, and what a SHOCK that Romney/Ryan would have raised the age of Medicare eligibility to 70..."
Race, class, whatever gets you through the night, is alright, is alright.
Also, too.
#1 Posted by Thimbles, CJR on Tue 27 Nov 2012 at 02:58 PM
Was there more up to date on Germany's social security type benefit within the country from later than 2012? This seems to weaken the overall point to put out data from 12 years ago to make your point. The point is especially weakened when you consider Germany's implementation of austerity measures in 2010, led by conservative German chancellor Angela Merkel
#2 Posted by Brett Solesky, CJR on Tue 27 Nov 2012 at 05:10 PM
"Was there more up to date on Germany's social security type benefit within the country from later than 2012?"
You can look here:
http://www.businessinsider.com/countries-most-entitlement-spending-2011-4?op=1
Meanwhile:
http://www.youtube.com/watch?v=tm3VtwX1eiU
Tim Geithner is heading the negotiations on this thing.
The tax cheat. The guy who used to eat lunch with Pete Peterson and Bob Rubin.
We're not going to see any revenue from rates, we're going to see tax expenditures lowered, ones that had benefited the middle class, used to pay for lowered rates on the rich and corporate.
And we're going to see actual 'attempt' at deficit reduction through spending cuts on entitlements.
And only blood and teeth on the floor will change their minds.
#3 Posted by Thimbles, CJR on Wed 28 Nov 2012 at 06:18 AM
I wasn't aware that Lloyd Blankfein had any expertise or qualification to speak about retirement issues or Social Security. So I'm not sure what the hell CBS was doing even giving him a platform on the issue. For the record, here's an interesting graphic comparing retirement benefits for various CEOs associated with the Fix the Debt silliness compared to the very lavish average Social Security benefits.
CEO-Retirement-Pay-TALL.jpg (366×1163)
via Ethan Rome: Goldman Sachs CEO Lloyd Blankfein Wants Seniors to Get Less
Really, Scott Pelley is the worst kind of stenographer and CEO fanboy. He's not even credible.
#4 Posted by James, CJR on Wed 28 Nov 2012 at 11:22 PM