In North Carolina, a television ad attacks incumbent
Democratic Senator Kay Hagan for supporting a “controversial plan” that “raises
the retirement age” for Social Security. The ad comes from Crossroads GPS, the
super PAC run by Republican Karl Rove. A Republican attack on a Democrat for
cutting Social Security benefits? It’s just one instance where voters are
hearing confusing claims about Social Security reform. Social Security has
surfaced as a major issue in Senate rates in Alaska, Colorado, Iowa and Arkansas.
Seeing through the fog can be difficult. Hagan, for example,
left herself open to Rove’s attack by saying encouraging things about the 2010
Bowles-Simpson report on the federal deficit - which did call for a gradual
increase in retirement ages. Bowles-Simpson never came up for a vote, and Hagan
never specifically endorsed higher retirement ages. But no matter.
Elsewhere, candidates are lobbing charges at one another
about privatizing or means-testing Social Security - while others want to pump
revenue into the system and expand benefits. Many candidates say they want to
“strengthen” Social Security or keep it “strong.” That could mean anything, but
usually it is a tactic for leaving the door open to benefit cuts.
Social Security is most Americans' primary retirement
resource, and voters deserve straight answers. A debate about the program’s
financial challenges is overdue, and could bubble up to the surface in Congress
soon.
Social Security’s trust fund is projected to be depleted in
2034, when the youngest baby boomers turn 70. At that point, revenue from
payroll taxes would cover just 77 percent of benefits. Fixing the problem will
mean new revenue, benefit cuts or some combination of the two. It could even
involve increased benefits for at least some seniors, an idea advocated by a
growing group of progressive Democrats.
Here are the questions on Social Security that voters - and
journalists - should be posing to candidates this fall.
- Do you support a
higher retirement age? Social Security benefits pivot around the Full
Retirement Age (FRA), the age at which you’re entitled to 100 percent of
promised benefits. That age already is rising from 65 to 67, based on year of
birth. Further changes could involve tinkering with the FRA, or with the
earliest eligibility age, currently 62. In any case, it’s important to
understand that a higher retirement age is a benefit cut, no matter when you
retire. That’s because it raises the bar on how long you need to wait to
receive benefits.
- Do you support the
“chained CPI?” Social Security awards an annual cost-of-living adjustment
(COLA) tied to the Consumer Price Index for Urban Wage Earners and Clerical
Workers (CPI-W). President Barack Obama and others in Washington have
advocated switching to a “chained CPI,” which some say more accurately measures
changes in consumer spending. But it’s a benefit cut. The Social Security
Administration has estimated the chained CPI would reduce COLAs by three-tenths
of a percent annually. Under this scenario, the anticipated 1.7 percent COLA
for 2015 would be 1.4 percent.
- Should Social
Security be “means tested?” This sounds painless. The wealthy don’t need
Social Security, so cut their benefits. Trouble is, it wouldn’t do much to help
Social Security’s finances, since the program’s benefits don’t go mainly to the
rich.
Means-testing also implies a fundamental change to Social
Security’s promise - you pay into the system while you work in return for a
promise that benefits will be available in retirement.
- Should benefits be
increased? Rising income inequality and diminishing traditional pensions
have many seniors facing the prospect of impoverished retirements. Legislation
proposed in the Senate would boost benefits by $65 a month, on average, and
make the COLA more generous, not less. The bill would pay for all that - and
extend the trust fund’s life substantially - by phasing out over five years the
cap on earnings subject to Social Security taxes ($117,000 this
year).
The next Congress may be forced to deal with all this
because of another financial problem with Social Security. The disability
program will be able to pay full benefits only through the end of 2016. If
Congress doesn't act soon, 9 million disabled people will see their benefits
cut by 20 percent.
The solution is a small reallocation of resources from the
retirement program, but Republicans are indicating that disability reform won’t
be done without reform to the entire Social Security system.
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