MILLER: Simple entitlement reform

Small change in Social Security/Medicare retirement age saves billions

Illustration: Entitlements by A. HUNTER for The Washington Times.

Rick Perry’s exit from the presidential race Thursday left the field with one less reformer willing to take on the single most important budgetary issue: entitlements. Social Security and Medicare’s growing liabilities are driving this nation toward a Greek-style debt crisis. Politicians know the current system is unsustainable and that raising the retirement age is a necessary reform. Few are brave enough to risk doing the right thing.

Democrats have tried to scare seniors into thinking the slightest adjustment to these programs will send them over the proverbial cliff - even though nobody is suggesting changes that would affect anyone currently over the age of 55. The reality is Social Security and Medicare are outdated and must adapt to the baby-boom generation’s longer life spans and increased health care costs. The full retirement age for Social Security is 66 years, just one year more than it was when FDR set up this Ponzi scheme.

As Mr. Perry pointed out during the campaign, Social Security was not created with the idea that Americans would live 15 or more years beyond retirement. In the 1940s, life expectancy was 61 years for men and 65 for women. Now, it’s 76 for men and 80 for women. While we’re all happy to see our parents and grandparents live much longer lives, each senior in retirement is being supported by only three younger workers. That’s why we have to borrow so much money to keep the government checks in the mail.

Republican front-runner Mitt Romney understands the problem. “I’d also add a year to two to the retirement age under Social Security,” the former Massachusetts governor said in the Fox debate on Monday. He would adjust how benefits are indexed for inflation and wealthier Americans. Former Pennsylvania Sen. Rick Santorum would do the same. Texas Rep. Ron Paul wants to shuttle the whole program after paying out to current retirees.

Medicare’s eligibility age of 65 years has not changed at all since the program began in 1966. Mr. Romney supports “a slightly higher retirement age” and shifting the program to the premium-support optional plan that was recently crafted by House Budget Committee Chairman Paul Ryan. Unless something is done, Medicare’s own trustees say it will go belly-up in only eight years.

The Congressional Budget Office (CBO) said last week that raising the Social Security retirement age gradually to 70 would reduce outlays 13 percent. Raising Medicare’s age gradually to 67 would reduce costs by 5 percent. Small changes in age mean billions in savings. As a side benefit, raising the retirement age means people would stay in the work force longer, increasing the output of the economy. In turn, that would also lead to more tax revenue in Washington to help balance the budget.

Doing nothing is no longer an option. The only alternatives to raising the eligibility are reducing benefits and hiking taxes on younger workers. Our next president needs to be someone who realizes those aren’t acceptable options.

Emily Miller is a senior editor for the Opinion pages at The Washington Times.