Wednesday, October 29, 2008

Leading economist says we will have to slash benefits for seniors, especially by "means testing" social security

In a feature called “The Big Idea” in Money Magazine, for November 2008, p. 28, Isabell Sawhill maintains that social security benefits for many Americans should be cut, now. The interview is authored by Goerge Mannes and is called “Why we have to cut benefits for seniors: Economist Isabell Sawhill says America’s elderly are getting too big a slice of taxpayers’ money.” Online, the story appears on CNN’s money site here.

She says, “Right now the benefit formula provides a pretty good retirement income to those who make more than $100000 a year. I don’t think that the working-age population should continue to fund benefits for those who are so well off.” That certainly sounds like a call for "means testing" of social security benefits, or possibly even revising the whole "number holder" concept.

Well, today, most retirees collect social security benefits based on what they contributed. Generally, the more they contributed in FICA taxes (and sometimes, the more their spouses contributed), the more they collect. It’s true that in an sense the income to SSA comes from current taxes. But current retirees have already contributed. The people who started the system in the 1930s as FDR developed it had not contributed, however.

She also refers to “the fact that every individual, every generation, should expect more from their government when they’re young and less when they’re old.”

Does this mean we cap the age at which we offer certain Medicare treatments?

Social conservatives want to see adult children (especially the childless and unmarried) take more generational responsibility for the elderly. As I noted, twenty eight states have filial responsibility laws and are going to come under pressure to try to use them.

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