Is There a Less Painful Way to Fix Social Security?

A lot of people don't realize that when politicians talk about "entitlement reform", they are talking about Social Security & Medicare, to which people are "entitled" w/o having to prove need.

Fiscal Times

By Eric Pianin
October 12, 2015

Former Congressional Budget Office Director Douglas Elmendorf has just offered his prescription for addressing the long-term costs of Social Security and Medicare at a time, he says, when the federal debt is on a dangerous upward trajectory and is larger compared with the overall economy than at almost any time in history.

“Therefore, cuts in Social Security or Medicare benefits, or increases in taxes used to finance those programs, will almost certainly be needed to put federal debt on a sustainable path,” Elmendorf wrote in an op-ed in The Washington Post.

In deciding precisely how to go about slowing the growth of the $18.3 trillion debt with an aging population, Elmendorf cautioned, two important factors must be kept in mind: Incomes for all but the wealthiest Americans have grown quite slowly in recent decades and changes in labor markets are significantly diminishing the role of traditional employer-provided retirement benefits.

Few issues in Washington are more sensitive than that of entitlement reform.

•••••

Like New Jersey Gov. Chris Christie before him, Kasich last Friday caused an uproar in New Hampshire by warning that seniors would have to “get over” cuts in their Social Security benefits if he is elected president and carries out his entitlement reform initiatives.

•••••

Though he wasn’t responding directly to Kasich, Elmendorf offered a criticism of the kind of cuts Kasich appeared to endorse. “If we narrowed the gap between federal revenue and spending through significant across-the-board cuts in Social Security and Medicare, we would significantly reduce total retirement income for many lower- and middle-income people,” he wrote. “That approach would be wrong, in my view, because it would impose a large burden on the people who have been experiencing the slowest income growth. It would also be wrong because those benefits have distinctive characteristics that are even more important for people who do not have defined-benefit pensions.”

•••••

Rather than going after benefits across the board, Elmendorf said he would focus on reducing Social Security and Medicare benefits for high-income beneficiaries and raising the ceiling on payroll taxes on workers with high earnings. “Taken together, such targeted measures could eliminate much of the estimated 75 year shortfall in the system,” he wrote, citing previous CBO studies. “In Medicare, additional tax revenue could be raised by boosting the payroll tax rate for workers with higher earnings.”

Kasich revealed last week that he wants to “privatize” Social Security for future seniors and reduce benefits for baby boomers who are nearing retirement.

•••••