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.