Hot pepper will keep squirrels out of birdseed but won't harm birds.  Mix in three tablespoons of hot pepper for every pound of seed. Cayenne pepper (the Capsaicin compound that makes your mouth get hot and tingle) only affects mammals, and once wildlife invaders smell and taste it, they won't return.  An alternative is to provide bird foods that squirrels don't like, such as proso millet seed, nyjer seed, and safflower seed.