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Retire Fix the Debt

Joseph Hines

The Campaign to Fix the Debt is the newest power-player in D.C. Founded by the beloved Erskine Bowles and Alan Simpson (who are taking their act on the road to the tune of $40,000 dollars an appearance, around the average American's yearly income), Fix the Debt advocates a responsible solution to reducing our federal debt.

Unfortunately, Fix the Debt's conception of responsibility differs from that of the average American. That's because they're made up of some of the richest CEOs in the country with members that include Jamie Dimon of JP Morgan, Lloyd Blankfein of Goldman Sachs, Larry Fink of BlackRock, Kenneth Frazier of Merck, and Steve Ballmer of Microsoft. A representative bunch.

In an insightful piece yesterday, Kevin Roose at New York Magazine investigated the group's roots. Not only are they seeking to reduce the debt on the backs of the poor, they see the organization as an opportunity to advance their own careers:

interviews with a number of organizers and CEO council members point to a massive networking effort among one-percenters — one that relies on strategically exploiting existing business relationships and appealing to patriotic and economic instincts.

With an impressive budget of $3 million at its inception in July, bitter Wall Street financiers really began pouring money into the group after the election. They're now up to $42 million dollars. The well-funded millionaire cabal doesn't like to name specifics policies claiming “we would lose people if we got more specific about our goals. We’d rather try to influence the overall broad parameters of what happens.”

But those broad themes have consequences, and there's a reason they'd lose support if they clarified their goals. One of their principal, and most hypocritical, contributions to the tax debate has been their insistence on Social Security cuts as part and parcel of the a fiscal cliff deal. Lloyd Blankfein, one of Fix the Debt's most prominent advocates, has made cutting retirement benefits a fundamental part of fiscal responsibility. His argument:

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 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.

Lloyd Blankfein, it should be noted, holds $12 million dollars in retirement assets, whereas 40 percent of Americans receive the vast majority of their income from Social Security's $12,000 annual payment. 

A report from the Institute for Policy Studies further puts Fix the Debt's advocacy in perspective. While aggressively pushing curbs to retirement spending, the CEOs that make up Fix the Debt lead companies that have systematically underfunded their retirement plans. The report states that "forty-one of the 71 companies offer employee pension funds. Of these, only two have sufficient assets in their funds to meet expected obligations." Maybe they should meet their own employee obligations before lobbying the federal government to defund Social Security, which could fully pay its benefits through 2033 without changes.

Those CEOs, however, will be doing just fine. From the report:

The 71 Fix the Debt CEOs of public companies, which have to disclose their plans, have average retirement assets of $9.1 million. Of these 71 CEOs, 54 participate in their company‘s retirement programs and have collective pension assets of $649 million, or more than $12 million per CEO — enough to generate a $65,873 pension check each month for life. In contrast, the average monthly Social Security check for retired workers is $1,237.

That's in stark contrast to their employees. Only 60 percent of those 71 CEOs offer pension plans to all employees. That mirrors the larger trends in the economy of an escalating retirement crisis. From Demos' new report on retirement security:

How can such well-off men (and they are almost entirely men) be so unaware of the plight of their own workers? Ezra Klein describes why CEOs like Lloyd Blankfein and his colleagues at Fix the Debt so staunchly advocate retirement reform. He notes that most Social Security beneficiaries start taking benefits at 62, rather than 65, because:

The people who make it, the pundits and the senators and the CEOs, they’ll never feel it. They don’t want to retire at age 65, and they don’t have short life expectancies, and they’re not mainly relying on Social Security for their retirement income. They’re bravely advocating a cut they’ll never feel.

Retirement needs to be expanded, not contracted. But with groups like Fix the Debt limiting the possibility for a national solution, the best approach is to pursue retirement plans state by state. Robert Hiltonsmith, Teresa Ghilarducci, and Lauren Schmitz provide such a solution in their proposal for State Guaranteed Retirement Accounts. Those accounts would be voluntary, low-fee, and low-risk, and cover the slack that the altruistic CEOs at Fix the Debt have left to the taxpayer.

Unfortunately for us, these millionaires are already being given outsized influence, with a personal meeting with President Obama last week to discuss their (read: the super riches') solutions to the upcoming "fiscal cliff." Let's hope it'll be their last meeting.