Monday, June 10, 2013

NY Times: “What’s next for Social Security?”

Not benefit cuts, if the Times editorial board has its way. While they make some solid points, they also rely on some dubious evidence.

For instance, most reform plans would reduce the growth of benefits over decades. The fact that Americans today have been battered by a recession doesn’t speak against changes over long periods.

Likewise, while a rising retirement age will reduce replacement rates – the ratio of benefits to pre-retirement income – that’s not irrational when life spans are rising. Despite what the Times says, benefits aren’t being reduced in real terms.

Likewise, while Medicare Part B premiums are rising – thus reducing net Social Security benefits – that’s because Medicare provides ever-more generous benefits each year. And since premiums pay only 25 percent of Part B costs,  total payments to seniors are rising a lot faster than they’re being cut.

All that said, Social Security should remain strong for the people who need it. But part of “strong” is financially strong, and we need to figure out how to make that happen.

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