Obama Steep Hike In The Retirement Age Not The Best Way To Fix Social Security

Bill Scher

Potentially overlooked in yesterday’s blogger roundtable with President Obama is his response to the question “Will you rule out raising the retirement age to 70?”

House Minority Leader John Boehner has explicitly backed the proposal, and a raise in the retirement age is reported to be under discussion by the President’s deficit commission, which is expected to produce its recommendations in December.

Yet the President strongly suggested he would not support such an increase.

Q: Mine is an easy question. Will you rule out raising the retirement age to 70?

THE PRESIDENT: We are awaiting a report from the deficit commission, or deficit reduction commission, so I have been adamant about not prejudging their work until we get it.

But I think you can look at the statements that I’ve made in the past, including when I was campaigning for the presidency, that Social Security is something that can be fixed with some modest modifications that don’t impose hardships on beneficiaries who are counting on it.

And so the example that I used during the campaign was an increase in the payroll tax, not an increase — let me scratch that. Not an increase in the payroll tax but an increase in the income level at which it is excluded.

And so what I’ve been clear about is, is that I’ve got a set of preferences, but I want the commission to go ahead and do its work. When it issues its report, I’m not automatically going to assume that it’s the right way to do things. I’ll study it and examine it and see what makes sense.

But I’ve said in the past, I’ll say here now, it doesn’t strike me that a steep hike in the retirement age is in fact the best way to fix Social Security.

That doesn’t totally shut the door to the proposal. But neither is the President seeking to lay the groundwork for it.

And his basic point — that lifting the payroll tax gap for the wealthy is preferable to raising the retirement age — is little changed from what he said one year ago at a Missouri town hall:

… there are only a handful of ways to make these changes. Number one, you could just keep on trying to borrow a trillion dollars, or a couple trillion, or however much it takes from China. But that’s not such a good solution…

Second option is to gradually raise the retirement age … I don’t think this is the best option just because we just talked to an auto worker over here — that’s hard work. And if people’s — if the retirement age is already 67, and now you want to get it up to 68 or 69, if you’re working on an assembly line, and you’ve been doing that for 50 years, or 40 years, that’s some tough stuff…

…You could cut benefits. You could raise the tax on everybody, so everybody’s payroll tax goes up a little bit.

Or you can do what I think is probably the best solution, which is you can raise the cap on the payroll tax.

And earlier this month he made the case for lifting the payroll tax cap during the MTV town hall:

I have said that all options are on the table. I think we’ve got to look at how we preserve it for the next generation. I do think that the best way to do it would be to look at the fact that right now you only pay Social Security taxes up to about $106,000, and after that, you don’t pay any Social Security tax. So that means Warren Buffett, who makes more than $100,000 a year, the vast bulk of his income, he doesn’t pay Social Security taxes on it. That could be modified or changed in a way that would help extend the solvency of Social Security.

If nothing else, it’s clear from what the President says to the public that he knows what solution resonates best with the public.

We’ll see in December if the deficit commission possesses the same sense, or if not, how the President responds.

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