Dem, GOP Senators demand Social Security reform

posted at 12:55 pm on April 13, 2011 by Ed Morrissey

Barack Obama may avoid mentioning Social Security in his speech today, but the Senate may not let him off the hook.  Both Democrats and Republicans in the upper chamber demanded movement on reform to salvage Social Security with calls for higher retirement ages.  The Hill reports that a small group of Democrats have demanded reform — enough to give Republicans the votes to force it:

Several Democratic senators are separating themselves from their leadership and encouraging President Obama to cut Social Security benefits by raising the retirement age in order to keep the entitlement solvent.

Sens. Tom Carper (D-Del.) and Sen. Dianne Feinstein (D-Calif.) and Sen.Joe Lieberman (I-Conn.), who caucuses with the Democrats, are all openly calling for reform, and making it plain that the party is disunited on the issue when a titanic debate over debt is gathering momentum.

If the president called for raising the Social Security retirement age by a year or two, phased in slowly over several decades, these senators say they could support him.

Later, Republicans answered with a plan for hiking the retirement age and means-testing benefits:

Three Republican senators on Wednesday will propose a Social Security reform package that would raise the retirement age to 70 and cut benefits for the wealthy.

Sens. Lindsey Graham (S.C.), Rand Paul (Ky.) and Mike Lee (Utah) previewed their proposal on Fox News, saying that it will put the entitlement program on a long-term path to solvency without raising taxes.

The senators said that their plan would gradually raise the retirement age from 67 to 70 and would not affect individuals age 56 or older. Graham said that the proposal uses the same formula Congress used to raise the retirement age from 65 to 67, so that people born in 1970 would become the first group to have a retirement age of 70.

Means-testing is a sensitive topic.  Social Security is positioned as an earned pension system, not a welfare system, although in reality it’s closer to the latter than the former  now.  Means-testing will be popular in the same way that higher taxes on the wealthy are, ie, as a class-warfare argument.  However, disconnecting benefits from contributions will turn Social Security into an explicit wealth-redistribution system, and it’s likely to lose more political support in the long run — and for little real benefit, as the issues of solvency hardly involve benefit payments to the wealthy but the structural issues of longer payments to everyone through extended life expectancy:

Having both Republicans and Democrats working on Social Security reform in the Senate makes it more likely that some sort of bipartisan compromise will emerge.  If Obama fails to get ahead of this effort in the same way he failed to get ahead of budget cuts and entitlement reform in the last few weeks, the White House will lose even more credibility in political leadership.


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So my lockbox gets further and further away, whee!

WitchDoctor on April 13, 2011 at 1:00 PM

Doesn’t the DEMOCRAT leader of the Senate say there’s nothing wrong with SS and they’re not doing anything?

lizzie beth on April 13, 2011 at 1:00 PM

How about raising the limit on earnings past $106,800?

lizzieillinois on April 13, 2011 at 1:01 PM

Also, there must be horrific internal polling driving the Dems to do some of this stuff suddenly. They’ve always been opposed to changing anything about entitlements. Probably just shows how insanely skewed the media push polls really are.

lizzie beth on April 13, 2011 at 1:02 PM

The White House has no credibility left to lose, Ed.

Knucklehead on April 13, 2011 at 1:03 PM

Having both Republicans and Democrats working on Social Security reform in the Senate makes it more likely that some sort of bipartisan compromise will emerge.

Ha, hahaahhaahaha…..

You mean the Republicans will fold, yet again.

Sir Napsalot on April 13, 2011 at 1:05 PM

you’re talking about dear leader here, of course he will fail to get ahead of this or anything else

cmsinaz on April 13, 2011 at 1:06 PM

When SS was first introduced the retirement age was 65 and the average life span was 64 1/2. You got to retire, no average, six months after you were dead.

We should link SS to life span. If the SS retirement age was set to 3 years less than average life span things would be fixed permanently.

Sudden changes in any system cause shock waves. We need to transition into this. If we adjusted the SS retirement age by a max of six months a year it would give people a chance to adjust and make SS solvent.

I personally favor increasing the SS retirement age to 162 years. This would put SS back on firm constitutional footing.

The Rock on April 13, 2011 at 1:06 PM

Means-testing makes the re-distribution of wealth more blatantly obvious than any other program we have ever seen. Those who have paid in over a lifetime have been seeing that bite in their pay-statements week after week.
Many of those will then fail the means-test (i.e. won’t collect) because of their good decisions and planning (saving, frugality, good investments).
This will be a hard one to sell to the voters.

kooly on April 13, 2011 at 1:09 PM

so that people born in 1970 would become the first group to have a retirement age of 70.

that clears me by 2 years…

cmsinaz on April 13, 2011 at 1:12 PM

I’d be happy if they just pulled out all the money I have paid in ovet the last 37 years, give it to me, and let me out of the system…

Khun Joe on April 13, 2011 at 1:13 PM

personally favor increasing the SS retirement age to 162 years. This would put SS back on firm constitutional footing.

The Rock on April 13, 2011 at 1:06 PM

Not necessarily Rock, there are people still voting who are at least 162 years old, they should be allowed to draw SS.

hip shot on April 13, 2011 at 1:20 PM

Under the outstanding leadership of Pres**ent Obama

J_Crater on April 13, 2011 at 1:20 PM

When SS was first introduced the retirement age was 65 and the average life span was 64 1/2. You got to retire, no average, six months after you were dead.

We should link SS to life span. If the SS retirement age was set to 3 years less than average life span things would be fixed permanently….
The Rock on April 13, 2011 at 1:06 PM

That’s not the way it works. When people talk of life expectancy, they mean life expectancy from birth. The average life expectancy (right now, 75 years for men and 80 years for women) takes into account all the teenagers that die in car crashes, etc.

Once you make it to 67 (for convenience we’ll deal with men only) your life expectancy is 16 more years, or age 83. So even though the average male from birth can expect 8 years on Social Security (75-67), the average male going on Social Security can expect 16 years’ benefits.

To have benefits paid out on average for only for 3 years, the retirement age would have to be raised to 93 for men and 96 for women.

hicsuget on April 13, 2011 at 1:20 PM

How about raising the limit on earnings past $106,800?

lizzieillinois on April 13, 2011 at 1:01 PM

If that happened, I would cut back on the amount of work I do. No way will I bust my rear to pay and additional 15.3% on earnings over $106,800. At some point it is not worth it, just to pay more in unless the benefits also increased.

bopbottle on April 13, 2011 at 1:21 PM

Mitt Romney doesn’t know if we are ready for this.

steebo77 on April 13, 2011 at 1:22 PM

If Obama fails to get ahead of this effort

What ever do you mean? The President is above this fray!

cartooner on April 13, 2011 at 1:23 PM

So my lockbox gets further and further away, whee!
WitchDoctor on April 13, 2011 at 1:00 PM

Eh, I’m perfectly fine with raising the age. I’m fine with working until I’m 70. As it is, I’m already not expecting to get SS benefits by the time I’m retirement age anyway (I figure it will have gone belly-up by then), so if something can be done to make it solvent in the long-term, mores the better.

Vyce on April 13, 2011 at 1:28 PM

What ever do you mean? The President is above this fray!

cartooner on April 13, 2011 at 1:23 PM

Social Security reform is below Obama’s pay grade.

pedestrian on April 13, 2011 at 1:28 PM

For when things finally hit a brick wall and you need to rely on food and supplies you may have stored away.

“Spring Taste of Sam’s Club Open House is coming, 4/15-4/17, each day 11am-6pm. No non-Member upcharges during this event, so bring a friend! “

http://twitter.com/samsclub

A good occasion to get some supplies for the Lean times to come – minus the paper trail, if you get my meaning

Colbyjack on April 13, 2011 at 1:31 PM

1970 would become the first group to have a retirement age of 70.

Grandpa is 90…might give me 20 years to get mine! Gimmee. Gimmee. Gimmee.

WashJeff on April 13, 2011 at 1:32 PM

However, disconnecting benefits from contributions will turn Social Security into an explicit wealth-redistribution system, and it’s likely to lose more political support in the long run — and for little real benefit, as the issues of solvency hardly involve benefit payments to the wealthy but the structural issues of longer payments to everyone through extended life expectancy:

The point is to get the means testing to the point were only a small fraction of seniors qualify, so that you can reduce benefits without having huge numbers of people crushing you in the polls.

Count to 10 on April 13, 2011 at 1:32 PM

Eh, I’m perfectly fine with raising the age. I’m fine with working until I’m 70. As it is, I’m already not expecting to get SS benefits by the time I’m retirement age anyway (I figure it will have gone belly-up by then), so if something can be done to make it solvent in the long-term, mores the better.

Vyce on April 13, 2011 at 1:28 PM

The way I see it, by the time I can’t get payed for work anymore, it will be down to just keeping the disabled fed and housed. Anything more than that isn’t really sustainable.

Count to 10 on April 13, 2011 at 1:35 PM

Very interesting, considering Bush made this kind of reform a priority in his second term, and the Senate absolutely refused to consider it.

tom on April 13, 2011 at 1:37 PM

The senators said that their plan would gradually raise the retirement age from 67 to 70 and would not affect individuals age 56 or older. Graham said that the proposal uses the same formula Congress used to raise the retirement age from 65 to 67, so that people born in 1970 would become the first group to have a retirement age of 70.

The link to the “formula” shows that full retirement age is 66 for those born between 1943 and 1954, then adds 2 months each year until it’s 67 for those born 1960 and later.

If the new formula would not affect people aged 56 and older NOW, that would be those born in 1954 or earlier. In order to get from a full-retirement age of 66 for a person born in 1954 to age 70 for a person born in 1970, they would have to increase the full-retirement age by

(70 – 66) * (12 months/yr) / (1970 – 1954) = 3 months per year.

The formula voted in 1983 already increased the full-retirement age by 2 months/year for those born between 1955 and 1960. So this change would have minimal effects on those born between 1955 and 1959, and somewhat larger (but not huge) effects on those born between 1961 and 1970. But the latter group (who would retire between 2028 and 2037 under current law) might choose to keep on working for an extra 2 to 3 years instead of accepting reduced benefits, and contribute payroll taxes into the system while they earn high incomes, meaning more money coming into SS and less going out.

How would this play with the voters? A person born in 1970 is now about 41 years old, and would have to accept retiring in 2040 instead of 2037, and working for another 29 years instead of 26 years. These people were teenagers during the booming Reagan years, and young adults during the Clinton years. They probably have a life expectancy over 80 years, and their parents are probably still alive, so would they be willing to work an extra 3 years to enjoy 10 years of full benefits? Probably, and most of them are probably married with young children, and retirement is not really their biggest concern right now…

Steve Z on April 13, 2011 at 1:41 PM

the White House will lose even more credibility in political leadership.

How does one lose what it does not have?

bigjmantx on April 13, 2011 at 1:42 PM

The formula voted in 1983 already increased the full-retirement age by 2 months/year for those born between 1955 and 1960. So this change would have minimal effects on those born between 1955 and 1959, and somewhat larger (but not huge) effects on those born between 1961 and 1970. But the latter group (who would retire between 2028 and 2037 under current law) might choose to keep on working for an extra 2 to 3 years instead of accepting reduced benefits, and contribute payroll taxes into the system while they earn high incomes, meaning more money coming into SS and less going out.

There were a hell of a lot more people born in 1955-59 than in any other cohort, so the additional SS taxes they pay in while working longer, plus the delay in benefits paid out to them, would add up to real money.

rockmom on April 13, 2011 at 1:47 PM

We’ve been hearing SS was in trouble for over 20 yrs, that’s why I saved as much as I could so I would be able to eat and pay my bills. Anyone who didn’t, deserves to live on what the govt gives them including any cuts. Add MC to that as well.

Kissmygrits on April 13, 2011 at 1:49 PM

It’s good to see the some GOP senators come up with a credible plan to reform Social Security; indeed, by using the same formula to raise the retirement agreed to by Reagan and the Democratic Congress in the 1980s, they’re giving today’s Dems some political cover to sign on to the plan, since they’ve already done so once.

Provided that the retirement age after this increase is then indexed to average life expectancy automatically, and that some graduated means testing is introduced, this really should make the program solvent into perpetuity.

Well done.

Inkblots on April 13, 2011 at 1:59 PM

I worked 1/2 my life under SS, and the other under a state retirement system. When I did retire, it was on a state program. My SS benefits were REDUCED based on what I was getting from the state.

Essentially, the US government STOLE that money they took from me, PROMISING that I’d get it back “when you retire”.

SS has been a government run Ponzi scheme since day one.

GarandFan on April 13, 2011 at 2:05 PM

Means-testing is a sensitive topic. Social Security is positioned as an earned pension system, not a welfare system, although in reality it’s closer to the latter than the former now.

Honestly, we’re so screwed on the merit of these miserable failures of these programs that something has to be done.
Since FDR & all the morons that followed after him lied & SS & associated programs have no trust fund & are basically taxes that we are never going to be entitled to anyway, I say do this. Like in Ryan’s plan.
A weaning of the dependent populace is going to have to occur so people don’t go ape $hit.
Another thing we can do is stop giving SS etc benefits to people who aren’t really ‘disabled’.
I don’t mind doing something for the truly unfortunate, but it shouldn’t be a fricking lifestyle.

Badger40 on April 13, 2011 at 2:14 PM

And what I don’t really understand is why people don’t understand that if they were allowed to keep more of that money that’s being taken from their checks for SS & Medicare that they would make more $$ on it if they did something else with it other than give it to the govt.

Badger40 on April 13, 2011 at 2:15 PM

the White House will lose even more credibility in political leadership.

Not that it matters. He’s already running for re-election and those likely to vote for him aren’t paying attention to these “details,” they just want to vote to continue working on hope and change.

ConservativeinCO on April 13, 2011 at 2:26 PM

..ironically, today I collected my first SS check after paying into the system 42 years. Here’s some juicy tidbits:

(1) Despite being born of 3 March 1945, I had to wait until the second Wednesday of the following month to start collecting. My first paycheck (somewhere back there in the mists of time) had FICA deductions. Ass holes basically postponed my payments. Times a million, the float looks pretty good.

(2) I am still working despite receiving over two large per month from SS. Because of this, I can expect to pay taxes on 85% of my SS earnings, in essence adding two large x 12 months or $24,000 to my income. Double taxation?

(3) FICA is still deducted from my paycheck. Despite this, my benefits remaining fixed except for now-frozen COLA raises. Probably closer to triple. Try, “Grease up and bend over, Mr Warplanner.”

One day I’ll sit down and figure what the net-net-net-net outlflow to the gummint will be on my stipend. Probably is fairly pathetic..

..and yet, these butt wipes can’t keep this Ponzi scheme running.

The War Planner on April 13, 2011 at 2:28 PM

Not only should the benefit age increase, there should be a formula in place for further increases proportional to life expectancy increases. When social security started, life expectancy was less than the original benefit age of 65 years. Social security would be rolling in money if most of us were dead long before age 65.

burt on April 13, 2011 at 2:34 PM

By the time I get to S.S. this political Ponzi Scheme will have unravelled completely, so the D.C. charade is merely mordently amusing.

(40 million illegal alien contributions being confiscated, notwithstanding.)

Means test away!
Raise the age to 90!
It’s all smoke and mirror balls.

profitsbeard on April 13, 2011 at 2:35 PM

Just eliminate any social services aid to illegal aliens and a huge burden will be lifted. At least what is spent on them should go to American citizens. We’re all tightening our belts, but not them. They continue to get everything they’re getting and we have less and less.

silvernana on April 13, 2011 at 4:42 PM

Just eliminate any social services aid to illegal aliens and a huge burden will be lifted. At least what is spent on them should go to American citizens. We’re all tightening our belts, but not them. They continue to get everything they’re getting and we have less and less.

silvernana on April 13, 2011 at 4:42 PM

But that’s so mean. Better our nation go bankrupt than some liberals see us as mean.

slickwillie2001 on April 13, 2011 at 6:18 PM