Senate candidates take stands on Social Security reform
Utah's Republican Senate candidates have outlined a vision for reforming Social Security that includes raising retirement ages, private accounts and, in Mike Lee's case, taking the retirement safety net away from the federal government and letting states run it.
"Somewhere down the road, we need to ask, 'Is the federal government the right government to be administering this?' " Lee asked. "You don't find a retirement system in [the Constitution]. That, with the 10th Amendment, says it's a program best administered by the states."
Lee's proposal would mark a historic shift in the 75-year-old program, which the U.S. Supreme Court ruled in three cases in 1937 is a constitutional exercise of federal power.
Timothy Smeeding, a professor at the University of Wisconsin at Madison who studies Social Security, was blunt in his assessment of Lee's proposal: "That is total horsesh."
"What happens to people who move in and out of the state? It's just knee-jerk," he said. "[Social Security] is a federal program. It covers you no matter where you live and as long as you live."
With workers moving between states, a state-by-state patchwork is an idea that is impractical and should be discarded, Smeeding said.
The trustees of the Social Security Trust Fund are projecting that the fund is losing money as baby boomers retire, and will be depleted by 2040. Both Lee, 39, and his opponent for the Republican nomination, Tim Bridgewater, 49, said during a live debate on KCPW radio that the current structure is unsustainable and will lead the system to bankruptcy.
Bridgewater said he would back putting part of the money workers pay in Social Security taxes into private accounts invested in the stock market.
Private accounts, Bridgewater said, will "wean off younger workers" from Social Security benefits, Bridgewater said.
The problem with the private accounts is that they drain money from the Social Security system and aggravate the impending shortfalls in the system, said Gary Burtless, a scholar at the Brookings Institution who studies the Social Security system.
"You're not really solving the financial problem of Social Security. You're making it more acute and you're kicking the can down the road," Burtless said.
Lee also proposed significant hikes in the retirement age for younger workers, suggesting that for workers 20 years from retirement, the age at which they would qualify for benefits should be raised by one year every other year.
That means a worker who is 47 years old now 20 years from full retirement under the current system would not be able to retire until he or she is 77 years old, adding an extra 10 years to their expected period of employment.
The concept is that people would draw Social Security benefits for a shorter period of time, reducing the demands on the system. The current life expectancy in the U.S. is 78 years.
Burtless said that is a steeper increase in the retirement age than any he has seen studied. The Social Security Administration has modeled raising the retirement age by a month every other year, and it would eliminate about a third of the long-term deficit and ultimately he expects Congress will raise the retirement age.
But, he said, raising it at the speed Lee proposes "is pretty drastic."
Bridgewater indicated he would support increasing the retirement age, but was not specific as to how much he thought it should be raised.
Sam Granato, the Democratic nominee for Senate, said he has concerns about raising the retirement age, especially if it means workers who do physically demanding jobs have to work later in life.
He also blasted Lee for questioning the constitutionality of Social Security, which Granato said the Supreme Court has decided.
"He is running for an office that represents the people, and he should be concerned with that. Not his fanciful conclusions of how Supreme Court cases should have been decided, especially one that would adversely affect so many Americans," Granato said in a statement. "The people of Utah are not looking for an advocate who will overturn Social Security."
How secure is Social Security?
Trustees reports have projected that Social Security's Old-Age, Survivors, and Disability Insurance Trust Funds would become exhausted between 2037 and 2041. Without changes, estimated tax revenues will be sufficient to pay only about three-fourths of the scheduled benefits after trust fund exhaustion.
Source • Social Security Administration