Tuesday, September 7, 2010

No Increase In Social Security Age Eligibility!

Ezra Klein had an excellent piece in Sunday's WaPo criticizing the current push from the Deficit Reduction Commission to raise the retirement age for social security, which he notes seems to have bipartisan support on the commission and is the item they are most enthusiastic about, even though it would do a big fat zero about the size of the deficit in the near term and is widely opposed by the US population. Mark Thoma links to it and quotes a big chunk of it along with additional comments at http://economistsview.typepad.com/economistsview/2010/09/making-social-security-less-generous-isnt-the-answer.html#comments .

Klein notes that many supporting this age increase point to a large increase in life expectancy over the last 75 years, but much of this is due to a sharp decline of infant mortality. Men at 60 do not have that much greater life expectancy now than did men at 60 back then. Furthermore, there is a huge distributional factor: most of the increase in such expectancy has been among higher income people, and many of those people work in jobs that do not involve physical labor or are boring and oppressive, where people really would like to retire, but with the collapse of the defined benefit pension plans means more are going to rely on social security.

It really is astounding how totally sold out these commission members are. Almost nobody wants this, and it does little for near term deficits, but Klein notes that other things such as further reforming the medical system or reducing defense spending or raising taxes all seem more politically fraught, even if the public does not like this raising the age requirement. Indeed, the majority of workers who reach 62, take social security then, not waiting for the higher benefits of retiring at 66 or 70.


Shag from Brookline said...

Raising the retirement age might make sense if real jobs were available to the aging. With an unemployment rate approaching 10%, surely the rate for the aging is higher.

Jack said...

Raising the retirement age can only further aggravate the unemployment problem by keeping the elderly ensconsed in jobs that younger people need. That then leads to less younger people employed and contributing to the system through their FICA deductions. The people advocating such a ploy are the same people who have been trying to kill the program for years now.

Bruce Webb said...

"does little" if anything overstates the impact.

All proposals I see being floated exempt workers 55 and over at least initially. Meaning you get ZERO deficit savings until workers 54 and under are retirement eligible. Since early retirement is actuarially set to equate to Full Retirement Age this means NADA until 2023 or outside the Deficit Commissions target of reducing deficits to 3% of GDP by 2015.

The standard 10 year scoring used by CBO and OMB will show a big fat ZIP from his.

Hmm. ZERO plus NADA plus ZIP adds up to what?