Social Security, the decades-long mainstay of retirement income for seniors, is facing some serious changes if Congress gets its way.
Faced with an increasing and unpopular national debt, Congressional representatives from both parties are considering a raise in the minimum retirement age for full benefits to 70 for those 50 and younger now. They have also toyed with the idea of pegging cost-of living increases to the consumer price index instead of wage growth. In addition, they want to withhold benefits from retirees who simply have enough additional income to live on through savings and outside pensions.
The main issue is that the U.S. doesn’t have enough money to pay out benefits to retirees now, and definitely not to the next wave of retirees in the future. The country does not want to spiral into a debt crisis similar the one facing certain nations in the European Union. Social Security is a major budget liability, so providing the right fix now will provide some needed fiscal relief for the United States.
House Majority Leader Steny Hoyer (D- Md.) and Minority Leader John Boehner (R-Ohio), as well as several members of their parties, have made fiscal responsibility a major talking point in this midterm election year.
Rep. Hoyer is in favor of across the board cuts to Social Security and other programs, including defense spending. Rep. Boehner, however, is in favor of more targeted cuts to the exclusion of defense spending.
President Obama is in the fray as well. In November, a deficit commission he appointed will offer findings about reforming several big-budget programs. Many ideas are on the table, including proposals that both Republicans and Democrats have offered. The President is even considering the equivalent of a consumption tax to raise revenue to fight ballooning deficits.
Tackling Social Security, one of the largest budget items, actually can have a positive effect on a nation’s economic outcome, according to the International Monetary Fund. Aside from the obvious reduction in deficit spending, fixing Social Security can also ease financial markets.
Lawmakers and the President are bracing themselves for tough questions about the national debt as the midterm elections approach in the fall.