What should the U.S. do about the so-called “fiscal cliff”? Who better to ask than Goldman Sachs CEO Lloyd Blankfein, “one of the world’s most influential bankers”?

That’s what CBS Evening News must have been thinking, anyway, when they did a segment last night (11/19/12) all about Blankfein’s opinions. CBS‘s Scott Pelley began: “When we asked Blankfein how to reduce the federal budget deficit, he went straight for the subject that politicians don’t want to talk about.”

BLANKFEIN: You’re going to have to undoubtedly do something to lower people’s expectations. 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. PELLEY: Social Security, Medicare, Medicaid? BLANKFEIN: Some things.



It’s maddening, isn’t it, when someone who obviously knows exactly what needs to be done insists on being so coy about it? Luckily, Blankfein did offer some specifics on one of those things that we think we’re going to get, and aren’t:

And 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 that 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.

Huh. So Blankfein—who was paid $16 million last year, and owns $210 million worth of his company’s stock—thinks that people can retire on Social Security after working for 25 years? As Gene Lyons pointed out, that would mean that people are getting their first paychecks when they’re 42—or, assuming they’re willing to take the severe benefit cuts that come with early retirement, at 37. Or possibly he mistakenly believes Social Security allows you to retire at 41.

He also thinks people typically live to be 92 or 97, depending. In real life, of course, most people start working as early as 16, so they reach retirement age after 51 years of labor, when they have a life expectancy of 17 years—or 14 years if they’re an African-American man.

On the basis of this peculiar understanding of U.S. society—which, strangely, doesn’t seem to trouble Pelley at all—Blankfein has some news for us:

BLANKFEIN: But in general, entitlements have to be slowed down and contained. PELLEY: Because we can’t afford them going forward? BLANKFEIN: Because we can’t afford them.

You often hear this “we can’t afford them” line, sometimes from people who aren’t multimillionaires. For the record, in 1937, when Social Security Act was first implemented, the per capita GDP of the U.S. was than $7,971. In 1965, when Medicare was created, it was $18,575. Today it’s $42,671. (All figures in 2005 dollars.)

It’s hard to figure out how we could afford to take care of our old people in 1937 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. Unless it has something to do with the fact that in 1937 and 1965—people like Lloyd Blankfein didn’t make $16 million a year.

Correction: This post originally mixed up the year when the Social Security Act was passed, 1935, with the year it was implemented.