Pity The Poor Plutocrats
Pity the poor plutocrats.
What with Mitt Romney’s presidential campaign having come to an ignominious end, new champions have been called forth lest mobs of pitchfork-waving grandmas and torch-bearing old men rendered fearless by Dentu-Grip breach the walls of their elegant suburban redoubts.
One such hero is Lloyd Blankfein, the universally revered CEO of Wall Street investment bank Goldman Sachs. At least that’s how anchorman Scott Pelley presented him in a November 19 CBS News interview . Adopting a tone of awed deference most often reserved for British royalty and Hollywood actresses with breasts bigger than their heads, Pelley depicted Blankfein as “one of the world’s most influential bankers.”
Who better to advise the nation how to avoid the dread “fiscal cliff”—the latest phony, made-for-TV Washington melodrama? The great man even permitted CBS cameras into the Goldman Sachs trading floor, which Pelley treated as a signal honor.
A bunch of guys in neckties sitting in front of computer screens, in case you missed it. It could have been the sports betting room in any Las Vegas casino, essentially a high-tech bookie joint.
“When we asked Blankfein how to reduce the federal budget deficit,” Pelley said “he went straight for the subject that politicians don’t want to talk about.”
To guys with multimillion-dollar salaries, see, the deficit qualifies as the nation’s Number One Problem. Never mind the millions out of work, although as Paul Krugman keeps pointing out, the soaring interest rates and runaway inflation that deficit scolds keep predicting keep not happening. Investors seemingly can’t buy enough U.S. bonds at record low interest rates.
Now, there are several topics Goldman’s head honcho might be reluctant to talk about. Such as 2008, when Wall Street investment banks damn near destroyed the world financial system by gambling on crap securities based on subprime mortgages. Or the $10 billion federal bailout Goldman Sachs took to remain solvent, since repaid.
I doubt Blankfein would have much to tell CBS about the 2010 civil fraud lawsuit the SEC filed against Goldman for peddling junk derivatives it allegedly designed to fail. Many thought criminal charges would have been more appropriate. The bank ultimately settled for a $550 million fine. Blankfein testified to the U.S. Senate that Goldman Sachs had no fiduciary duty to inform clients it was betting against securities it was selling.
You wouldn’t buy a used limousine from this guy.
On CBS, Blankfein’s $16 million yearly compensation didn’t come up either, nor the reported $220 million worth of company stock he owns.
So what did this prince of finance think people needed to understand about the dreaded fiscal cliff?
“You’re going to have to undoubtedly do something to lower people’s expectations,” he said. “The entitlements, and what people think that they’re going to get, because it’s not going to–they’re not going to get it.”
“Social Security, Medicare, Medicaid?” Pelley asked.
“Some things,” Blankfein said. “…You can go back and you can look at the 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 certain things…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.”
Pelley nodded sagely. These jokers are never more solemn than when they can’t be serious. Instead of questioning Blankfein’s knowledge of American life or his ability to subtract two-digit numbers, Pelley prompted him to say that entitlement cuts must come “because we can’t afford them.”
But 30-year retirements after 25 years of work? Blankfein must think most Americans earn their first paychecks at age 42, retire at 67, and then draw Social Security until age 97.
The actuarial reality, of course, is that most Americans first go to work during their teens, pay Social Security taxes for 50 years, and then draw benefits for an average of 16 years. Twice the work, half the benefits Blankfein pretended to imagine.
Because, no, the man’s not stupid. But he evidently thinks you’re gullible, frightened and don’t know the facts—that Social Security is fully funded through 2038, and that its life can be extended indefinitely simply by raising the $110,100 salary cap on payroll taxes.
Something else CBS neglected to report was that they didn’t just happen to interview Lloyd Blankfein since Bernie Madoff wasn’t available.
Both he and Honeywell’s CEO David Cotes, who said much the same thing to CBS the next night, along with Erskine Bowles and Alan Simpson, who appeared two nights later, represent a corporate-funded lobbying group called “Fix the Debt,” whose goal is to keep plutocrats’ taxes low and cut corporate income taxes to zero by reducing grandma’s Social Security and Medicare.
None were so identified, definitely making it appear that CBS News has joined the team.
Photo by Fortune Live Media via Flickr.com