Recommendations from the Presidential Catfood Commission are expected on Friday. The commission is charged with finding ways to balance the federal budget and reduce the deficit. “Specifically, the Commission shall propose recommendations designed to balance the budget, excluding interest payments on the debt, by 2015.” Among the recommendations forthcoming from the committee will be to raise the Social Security retirement age to 69 by 2075 based on increased life expectancy and to reduce payments to current retirees.
Okay, Wait… Wait… Social Security is not a threat to the budget, especially by 2015. Social Security is fully funded for another 30 years. Social Security is self-funded. Any reductions in Social Security will not affect the budget deficit one iota. Savings will only extend stability of the program beyond the next 30 years. The proposal would cut benefits to young people just entering the workforce by as much as 36%. Social Security benefits now average $13,000 per year and would be reduced even further by the plan. Cuts in cost of living increases would begin next year, adversely affecting current retirees. Do we really need to make cuts to our most popular government program when it does nothing to help the debt crisis or the stability of the program?
Now, let’s address this “life expectancy” thing. There seems to be a bogus theory floating around that we are all living longer so we need to increase the retirement age. That theory is wrong. People aren’t living longer, rich people are living longer. Over the last 25 years, the life expectancy of workers in the bottom half of the wage scale has increased by only 1 year. Life expectancy for those in the upper half of the scale has increased by 5 years. According to the Social Security Administration;
Specifically, male Social Security–covered workers born in 1941 who had average relative earnings in the top half of the earnings distribution and who lived to age 60 would be expected to live 5.8 more years than their counterparts in the bottom half. In contrast, among male Social Security–covered workers born in 1912 who survived to age 60, those in the top half of the earnings distribution would be expected to live only 1.2 years more than those in the bottom half.
This graph pretty much says it all. If you are a lawyer, lobbyist or hedge fund manager with an easy lifestyle and access to better health care, you can expect to outlive your peers by nearly 6 years. If you are a Montana farmer with a bad back from tossing hay bales around for 40 years, sorry, you can wait a while longer to retire with fewer benefits.