Any conversation about Social Security reform must begin with hard facts: On the current track, U.S. federal income will be insufficient in 2025 — a mere 13 years from now — to pay for Medicare, Medicaid and Social Security and interest on the debt. All other spending, for defense, medical research, highways, education, energy, you name it, would have to be paid for with borrowed money. Conclusion, federal revenues must rise and spending on these major entitlements must fall.
Facing these painful, but very well-known facts, Congress has cut revenue for entitlements and let their spending increase.
A couple of years ago the Simpson-Bowles commission thoughtfully studied entitlement reform and proposed three changes to Social Security; increasing the amount of income subject to taxation for the system; changing the method used to calculate the annual inflation adjustment; and raising the retirement age twixt now and 2075 to 69.
Nothing happened.
Ezekiel Emanuel, an oncologist who moonlights as a thinker on public questions, has proposed a much more complicated solution. He would try what he calls graduated eligibility, which would base eligibility for the pension on lifetime wealth. The richer you are, he writes, the older you would have to be to go on the Social Security and Medicare benefit rolls. His schematic would have the richest quarter of the nation’s retirement-age citizens wait until age 70 to begin drawing a check.
There is more, much more, to his very complicated plan. But the gist of it is that the wealthy should wait longer than the poor.
Means testing — what Mr. Emanuel proposes — is a good idea. It can be reasonably argued the Mitt Romneys and Barack Obamas among us should never get federal pensions or have their doctor bills paid with tax money. These gentlemen not only are rich, they also have the means to become very much richer. They and the others in their wealth class can manage quite well without taxpayer help.
It’s the other 99 percent who must be considered and the Simpson-Bowles recipe is an easily understood, practical solution that the American people would accept if it were sold with enthusiasm by the nation’s leaders. It is, after all, patterned after the last major reform of Social Security, which was sold to the people by President Ronald Reagan and his good right arm in the Senate, Bob Dole, in 1983.
Reagan and Dole said it was necessary to increase the retirement age and tax more of an individual’s wages in order to keep Social Security sound. So they pushed those reforms through Congress and gave Social Security a longer lease on life that is now reaching its expiration date.
TODAY’S demographics are different. The percentage of the population over 65 is much higher. The ratio of workers paying into the system to the number of retirees keeps declining. But the good news is that the number of high earners has climbed dramatically. If the payroll tax were collected on those earning up to $250,000 a year and their employers, the system would be sound again. Today’s cap is $110,000.
Raising the eligibility age from 67 to 70 also would add years of vitality to the program, but this part of the reform package should be tempered by exceptions for those employed in occupations requiring physical labor or abilities that age destroys.
The goal of entitlement reform should be to make the systems sound and compassionate while requiring individual responsibility. Neither of these requirements are in sight today.
— Emerson Lynn, jr.
