Corporate leaders this week lobbied Congress to lower the nation’s debt by reducing Social Security, Medicare, and Medicaid benefits. One of those corporate executives was Lloyd Blankfein, CEO of Goldman Sachs, who told CBS that US workers need to lower their expectations about retirement security and accept cuts to Medicare and Medicaid.
US Senator Bernie Sanders, who opposes any cuts to the nation’s safety net programs, said that Blankfein’s call for cuts is another example of class warfare waged by corporate America and Wall Street against working America.
“Think about the arrogance of these guys on Wall Street who were bailed out by the middle class of this country when their greed and recklessness nearly destroyed the financial system,” said Sanders. “And now they come to Capitol Hill to lecture Congress and the American people about the need to cut programs for working people. This is what class warfare is all about.”
Blankfein and about 80 other corporate executives have signed on to a campaign called Fix the Debt, another one of Blackstone private equity group’s founder Peter G. Peterson’s debt reduction lobbying organizations.
As negotiations between President Obama and Republican congressional leaders on a debt reduction deal got underway, Blankfein and other corporate leaders who belong to Fix the Debt began lobbying members of Congress and taking their message to media outlets.
Fix the Debt has been circumspect about specific safety net cuts that it supports, saying only that benefit levels for all safety net programs should be on the table when negotiations over debt reduction take place.
Blankfein, however, was a bit more forthcoming when he told CBS’ Scott Pelley that the eligibility age for Social Security should be raised and benefits for health programs that help the elderly, the disabled, and low-income workers should be lowered. He also suggested that Social Security’s cost of living raises should be lowered.
In addition to lowering safety net benefits, Fix the Debt wants to fix the debt by reducing taxes, especially taxes on the wealthy.
It wants to preserve the Bush tax cuts that are set to expire in January. These tax cuts, enacted early during the administration of President Bush, have primarily benefited the wealthy. According to Citizens for Tax Justice, America’s richest 1 percent received on average an extra $66,384 in 2011 because of the Bush tax cuts. In the same year, the average US income was $58,506.
Blankfein and other members of Fix the Debt also want to reduce the highest marginal tax rate from 35 percent to 28 percent and to exempt corporations from paying taxes on foreign earnings that are returned to the US as profits. That exemption would mean a windfall of as much as $134 billion for 63 corporations whose CEOs have signed on to Fix the Debt campaign.
While Fix the Debt’s corporate leaders seek to reduce the federal debt by feathering their own nests with tax cuts and making retirement more precarious for the rest of us, their own retirement isn’t just secure; it’s opulent.
The Institute of Policy Studies reports that the average retirement assets of the 71 Fix the Debt CEOs whose companies are publicly held is $9.1 million.
Fifty-four of them participate in their company’s retirement program and have collective retirement assets worth $644 million, or more than $12 million per CEO, enough to generate a monthly pension payment of more than $65,000 for the rest of their lives.
The Fix the Debt CEO with the most pension assets is David Cote of Honeywell. His pension is worth $36 million and his deferred compensation $41.9 million, for a total of $77.9 million.
Blankfein doesn’t fare as well. His pension is worth only $30,000, and his deferred compensation $11.8 million, giving him a total retirement package of $11.8 million.
Meanwhile IPS reports that to generate an annual retirement income of $25,000 a year not including Social Security, a worker would need to have $500,000 worth of savings, but 34 percent of US workers have no retirement assets of any kind.
And the outlook will be bleaker in the not so distant future because more workers will have to depend on Social Security, whose average monthly benefit is only $1,237, for either their primary or only source of income during their retirement. Nearly half of all private sector workers in their fifties, 44 percent, have neither a traditional defined benefit pension nor a 401(k) type savings plan.
Only 20 percent of the private sector workforce is covered by a traditional pension, down from 83 percent in 1980. While 84 percent of public sector workers are covered by traditional pensions, 25 percent will receive no Social Security benefit because they don’t contribute to Social Security.
Since 2009, one year after the Great Recession began, 35 states have reduced pension benefits for public sector workers.