Thursday, February 12, 2009

Paying for the stimulus (and fixing SS, too)

There's a very simple way to pay for the enormous stimulus bill. It starts with the realization that people are living longer, healthier lives than they were decades ago when Social Security was established. Yet even though most people are staying healthy well into their 70's, SS retirement age hasn't budged in nearly three decades. We just had a man in his 70's, a man who'd endured years as a POW no less, run for President. Congress is full of people in their 70's and beyond. The notion of a "full retirement" age of 66 seems absurd.

SS outlays account for roughly $500 Billion. Raising the retirement age by 3 months, would cut the number of people receiving SS by about 1%, saving roughly $5 Billion. Do this every year for 32 years, and the result would a savings of over $3 Trillion. That could pay off the stimulus bill, plus interest, and still have money left over to address any fears people have about the insolvency of the system. At the end of the transition, people would be eligible for benefits at 70 instead of 62, and full retirement age would be 74 instead of 66. By that point, average life expentancy will likely be well over 80 (unless our health care system continues to deteriorate), leaving seniors with nearly an entire decade on average to enjoy full retirement benefits.

While many will whine about the unfairness of this, let's consider why we have such an enormous deficit in the first place. Fiscal responsibility has been rampant since 1980. Everybody who will be affected during the phase-in period of this change has been a voter since before that point. Collectively, there's a responsibility there and this is one of the most reasonable ways to address it. Unfortunately, the younger generation bearing the full impact of this change had nothing to do with the massive fiscal irresponsibility that got us here. But at the same time, we have enjoyed a tremendously high standard of living our whole lives and will probably hit 70 in better health than just about any generation in the history of the world. Plus we'll have had decades to prepare ourselves for this reality and get used to it. We'll get by.


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