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  • Romney's "60 Minutes" Fix For Social Security and Medicare

    President Obama’s and Governor Romney’s appearances on “60 Minutes” Sunday revealed an interesting contrast. The President punted on a serious question about the nation’s concern over spending—blaming everything on President George W. Bush.

    Right. Obama’s been in office how many years now? At what point does he take responsibility for government policy?

    On his turn, Governor Romney fielded a question about fixing one of the toughest programs to even talk about—Social Security. Despite umpteen government reports documenting Social Security’s plight, it still takes moxie these days even to admit Social Security is in sore need of fixing. To talk about a real solution takes real courage.

    Romney, when asked how he would change Social Security, first made clear there should be no changes to benefits for those in or near retirement. This is consistent with entitlement reforms in the Ryan budget plan.

    But he went on: “What I’d do with Social Security is say this: that again, people with higher incomes won’t get the same high growth rate in their benefits as people with lower incomes. People who rely on Social Security should see the same kind of growth rate they’ve had in the past. But higher income folks would receive a little less.”

    CBS’s Scott Pelley: “So in the Romney administration, in the Romney plan, there would be means testing for Social Security and for Medicare?”

    Romney: “That’s correct. Higher income people won’t get as much as lower income people. And by virtue of doing that–and again, that’s for future retirees. For–by virtue of doing that, you’re able to save these programs on a permanent basis.”

    Americans are demanding real solutions to the nation’s spending challenges. And presenting serious solutions is vital, as Washington and the public come to grips with the kinds of decisions we must make as a nation. Is this a radical solution?

    Hardly. Social Security is income-adjusted today. Benefits are already capped for high-income earners, and the calculation of initial benefits a new retiree receives is based on his or her past income, with higher-income earners receiving benefits that equal a lower share of their working income than lower income earners receive. Moreover, many retirees also have a share of their benefits taxed away, with upper-income retirees paying a much higher tax than those with lower incomes. Romney just proposes to extend this income adjusting so that upper-income retirees receive a bit less than they do now.

    Medicare is also income-adjusted, except more explicitly. This happens through premiums paid for the prescription drug benefit, also called Medicare Part D, and for physicians’ services under Medicare Part B. Just how far means testing would go to shoring up the financing for these two programs of course depends on the details. But it is possible to solve Medicare’s financing problems entirely through expanding the use of premiums—or means testing—for affluent seniors. Better yet, these ideas for income-adjusting Medicare have long received bipartisan support, so there is nothing radical here whatsoever.

    Should we and our children really pay higher taxes so Warren Buffett or Barack Obama or Mitt Romney can collect Social Security or Medicare benefits? In the same interview, President Obama said he was open to entitlement reform, but his solution, besides blaming Bush for all his economic and fiscal ills, would simply lock in these unaffordable benefits and raise taxes to pay for more spending (and then some).

    Just today, Obama campaign senior adviser David Axelrod remarked that this “is not the time” to discuss Social Security Reform. Uh…. really? The Social Security trust fund is already running permanent deficits which will grow larger and larger in the coming years. Same leadership: no answers from the Administration. Sadly, Axelrod stuck to the same tattered refrain that entitlements must be dealt with “in a balanced way.” Yet, the problem is not balanced. When the economy recovers, revenues will return to and surpass their historical levels. Yet spending will skyrocket. We are facing a spending problem.

    Entitlements—Social Security and Medicare, along with Medicaid—are unsustainable and unaffordable. (continues below chart)

    Without reform, they would push federal spending to nearly 36 percent of the economy within a generation. Debt held by the public would explode to nearly 200 percent. Neither of these outcomes can really happen, of course, so serious structural reforms are inevitable. Serious solutions are needed now, and expanding means testing further is both serious and sound.

    But solving these programs’ finances won’t be enough. Their benefits are both in need of a complete overhaul as well. Today, too many Americans live in poverty because their Social Security benefits are below the poverty level. Unfortunate retirees who cannot afford Medi-gap insurance coverage and develop a catastrophic illness find themselves facing bankruptcy because Medicare does not offer catastrophic coverage. We can and we must do better to strengthen and preserve the security net for those who truly need it.

    These kinds of solutions can be found in Saving the American Dream, Heritage’s blueprint for solving our spending and debt crises; solutions like slowly moving to a flat Social Security benefit that keeps seniors out of poverty, means testing Social Security so very affluent seniors have a reduced benefit, and moving to a more robust means-tested premium support mechanism for Medicare that offers seniors choice and control over their health dollars and better health outcomes.

    Like the tick-tock of the “60 Minutes” soundtrack, the entitlement crisis is looming, and Washington must face these facts and get cracking on solving it. Governor Romney offered up a serious start Sunday.

    Posted in Economics [slideshow_deploy]

    18 Responses to Romney's "60 Minutes" Fix For Social Security and Medicare

    1. "Romney, when asked how he would change Social Security, first made clear there should be no changes to benefits for those in or near retirement. This is consistent with entitlement reforms in the Ryan budget plan."

      According to the Social Security Administration anyone 63 or younger EXPECTS to live long enough to have their benefits cut. That is if the economy is strong.

      • Ironfirethefirst says:

        Obviously you need to read the plan. It is anyone younger than 55 yrs. of age at the time it is implemented! The course we are on will leave NO coverage for anyone!

        • You will have to elaborate on read the plan, where is it?

          You need to read the Trustees Report which says that anyone 63 or younger expects to live long enough to have their benefits cut. The Trustees have told you that there is no savings everyone 55 and older. If it is a battle of words, I will get the Trustees word rather than a politician.

    2. Social Security is already means tested and has been since 1984. Social Security benefits are means tested against other income with a clawback that is applied in the year tax filing. The revenue collected is returned to Social Security.

      • Ironfirethefirst says:

        The article states that SS was already means tested!

      • O2BMe says:

        Are you sure the money is returned to Social Security?

        • $24 billion in 2011.

          "•Income including interest to the combined OASDI Trust Funds amounted to $805 billion in 2011. ($564 billion in net contributions, $24 billion from taxation of benefits, $114 billion in interest, and $103 billion in reimbursements from the General Fund of the Treasury—almost exclusively resulting from the 2011 payroll tax legislation.) " SSA press release 4.23

    3. @TweeterNese says:

      One thing that could be fixed is to stop social security payments for underage children of retirees who do not need financial help. My Uncle received Social Security for both his kids just because he was retired. His kids were from a second marriage and he was a millionaire. He's passed away now and both kids have trust funds.
      Crazy!

    4. Guest says:

      Thanks for this positive review of the Romney-Ryan plan – it IS a good start, and I AM a senior on Medicare. For a very clear explanation of the basics of the plan, listen to Paul Ryan's speech at the recent AARP convention. The plan will NOT reduce benefits for current seniors or those nearing retirement. It will fix the problems over the long haul, so that Social Security and Medicare, the senior entitlement programs, will remain solvent for the next generation, but it must be done NOW. Please support Romney-Ryan!

    5. TexasMom2012 says:

      The clock has been ticking for decades, the alarm has rung and Obama hits the snooze button. You should not be surprised he has punted on everything. When he says "my plan" it is just words never a written plan. There is no chance that he will offer up a serious plan, that would require WORK an activity that Obama is seriously adverse to!

    6. Ironfirethefirst says:

      I agree totally with everything Alison writes except possibly about Medicare not having catastrophic coverage. Is that not what part A is? There is a deductible that may be a bit hard for some to pay, but it wouldn't bankrupt them. Unlike part B it us not optional and the coverage is free to most people. Currently one can combine the coverages into an Advantage plan that some cases eliminates the hgh copay for the first days of stay, and improves the coverage.

    7. Jeanne Stotler says:

      All supplement policies offer a plan that pays the deductable and any other costs not covered by Medicare A or B,it does cost more, but it is worth the peace and mind that an illness or surgery will not put you in bankruptcy. My plan F cost me about 2500 a year, cost of colonosopes and resulting surgery made sure this was very worthwhile. I will vote for Romney and Ryan, as thye are out to support not only seniors, but the welfare of the country.

    8. PaulE says:

      The 60 Minutes interview showcased two contrasting ideologies for addressing our problems. On the one hand, you had Romney laying out realistic solutions that would serve as a starting point to creating a long-term, viable solution. One the other hand, you had Obama whose "solution", if you can call it that, is to continue to blame everything on Bush, continue to promise that both Social Security and Medicare can continue, as is, into perpetuity with no serious reforms, and the only thing that had to be done to accomplish all this was to raise taxes on his definition, at least until after the election, of the "rich".

      The first, Romney, was an example of an adult addressing difficult issues head-on in an intelligent manner, while looking to preserve the existing benefits of those 55 and older. The other, Obama, was unfortunately an example of an inexperienced and economically illiterate individual trying to hide his lack of understanding of these complex issues by attempting to deflect blame onto anyone and anything else he could. All in the hope in the public will buy this diversion long enough for him to win re-election in November.

    9. Kathy says:

      I don't understand why social security and medicare are being called "entitlements." I have paid into the fund since I was 14 years old on every paycheck. These are insurance policies that I have paid for in advance. It is not my fault that the funding has been misspent. Both parties need to compromise and figure it out!!

    10. "It is not my fault that the funding has been misspent."

      Social Security is financed by making promises to future workers. There is no funding other than what is paid in each year by workers. Your 'paid' was given to other people. It wasn't spent on private pet projects of the government. You willing paid SS taxes which were given to other people based on the idea that future workers would do the same. They might and the might not – that isn't a matter of politicians compromising.

    11. jgaricia says:

      The Romney plan claims anyone 55 yrs of age and older would stay on the same traditional Medicare Plans if they so desire, no change. Insurance plans for large companies have always been based on the age and gender make up of a company, good, bad or indifferent health histories. What makes anyone thing that if you lump the oldest, sickest of the elderly together it is not going to make your premiums go sky-high down the road? Insurance companies do not want to insure the old and the sickly and that is a well known fact. Buyer beware or pay later.

    12. jgaricia says:

      Social Security is not an "entitlements" , but a benefit earned after many years of work. VA Compensation for Veterans who have lost limbs or payment to survivors of those killed in action is not "entitlements" either, but another benefit earned the hard way and during Service to your Country. It was wrong for Mr Romney to include these people and the elderly in his 47% remark about people dependent on Government and he never apologized or corrected his statement.

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