Two weeks ago, the co-chairs of President Obama’s debt commission released a report proposing, among many other things, raising the Social Security retirement age. According to the co-chairs, such a move is necessary to ensure Social Security’s continuation as a program. “As you all know, Social Security runs out of money in 2037. We’re not making it up. That’s the law,” said co-chair Erskine Bowles.
This sort of rhetoric has been repeated by members of both parties, with Sen. Mark Warner (D-VA) saying “We’re going to have to raise the retirement age slowly, in a slow way that doesn’t affect folks 50, 55. But this is just math. We’ve got to do some of these things.” In an interview published today in the Wall Street Journal, the next House Majority Leader, Rep. Eric Cantor (R-VA), agreed:
THOMSON: Are you in favor of increasing the retirement age over the short to medium term?
CANTOR: I think the discussion has to be: There is a difference between those nearing retirement and those who are seniors right now. And those who are younger are not going to see the benefits that seniors today are just by virtue of application of the statute. The formula is such that benefits will be reduced. So if we do not do something to extend retirement age, if we do not do something formulaically in terms of the top end or the top tier of income earners, you’re not going to have this program. You’re just not going to have it. That’s reality.
The “reality” espoused by Cantor and the others actually has no basis in reality. If nothing — nothing! — is done to Social Security, it will pay full benefits until the year 2037. After that, the program is still projected to pay out 75 percent of benefits until 2084, which is close to full benefits once inflation is accounted for. There are certainly progressive changes that could be made to further guarantee Social Security’s solvency, but Cantor’s house-on-fire rhetoric is simply inaccurate.
Plus, of all the policy steps available to Social Security reformers, raising the retirement age is the most regressive, and is pushed due to a faulty understanding of America’s increasing life expectancy. Average life expectancy has been rising, but largely as a result of increases among upper income earners. Middle- and low-income workers have not seen the same increases. As the Center for Economic and Policy Research put it, “there has been a sharp rise in inequality in life expectancy by income over the last three decades that mirrors the growth in inequality in income.”
As Nobel Prize-winning economist Paul Krugman asked, “you’re going to tell janitors to work until they’re 70 because lawyers are living longer than ever?” For Cantor, the answer is clearly yes.