Gary Johnson wants you to retire at 72, even later than Hillary Clinton and Bowles-Simpson Plan

Social Security really needs to be reformed. Medicaid probably needs to be capped when it comes to the states. Medicare, there needs to be some sort of means testing.

The (Social Security) retirement age needs to be raised. A portion of Social Security ought to be privatized, if not all. And there probably needs to be some means testing. It’s a Ponzi scheme that’s not sustainable.

“Citing a story in USA Today, which reported that a rash of retirements in 2009 is pushing Social Security to the brink, Johnson said the retirement age needs to be raised perhaps to 70 or 72. “This is the reality, we’re broke,” Johnson said in 2012.

Donald Trump’s position is that he won’t change Social Security, maintaining it as a contract with the American people, since workers paid into it with a promise of benefits in exchange for taxes. However, Wall Street wants cuts to all pensions, including military and public retirement plans, since that would afford more opportunities to increase profits and avoid future tax increases to pay for these programs. Trump would need to distance himself from big business interests to avoid agreeing to program cuts.

Bernie Sanders, who is no longer a candidate for President, but represented much of the Progressive political position, has urged increases in base payments and no cuts to Social Security benefits.

Candidate Jill Stein, the new Progressive leader, opposes cuts in Social Security, maintaining:

Strengthen rather than cut Medicare and Social Security. Remove the cap on social security taxes above a certain level of income.

Hillary Clinton on the campaign trail has declared, “I won’t cut Social Security.” But in the recently released email’s excerpts of her Morgan Stanley speech, she praised a corporate-friendly presidential commission that proposed changes to slash Social Security benefits.

The email shows Clinton telling Morgan Stanley bankers that the Simpson-Bowles commission “put forth the right framework” for dealing with fiscal challenges, and she also proclaimed “the Simpson-Bowles framework and the big elements of it were right.”

The Center on Budget and Policy Priorities (CBPP) reported in 2011, that the Simpson-Bowles proposed plan would “cut benefits for the vast majority of Social Security recipients, weaken the link between a recipient’s benefits and past earnings (which could undermine public support for the program), and, despite the claims of the co-chairs, fail to protect most low-income workers from benefit cuts.”

Charles Blahous, a foe of Social Security, who has argued that future benefits should be reduced from their currently legislated levels, and suggested that the program is more generous to retirees than is “commonly understood”, said Simpson-Bowles includes many cuts, including:

The biggest cost-saver in the plan is its proposed change to the “bend point factors” in the benefit formula. The Social Security benefit formula is built on a set of progressive marginal rates, somewhat like marginal income tax rates except in reverse. The current benefit formula’s benefit earnings brackets are 90% (on the low-income end), 32%, and 15% (on the high-income end). Under Simpson-Bowles, these three regions would be changed into four: 90%, 30%, 10% and 5%. As should be obvious, most of the cost containment from this provision would occur on the high-income end. The plan also contains some benefit increases for low-income workers and for the most aged, which I will discuss later.

The plan would also index Social Security’s early and normal retirement ages to life expectancy after 2022 to maintain a constant ratio of retirement years to working years going forward. In effect this means that each eligibility age would rise by one month every two years. This is hardly a sudden change. It’s actually a far more gradual rate of increase – about one-fourth as fast – than the one just phased in during the last decade.

The plan would shift to the use of the “chained CPI” to calculate Social Security COLAs. This is estimated to shave roughly 0.3 points off of annual COLAs based on what is believed to be a current methodological overstatement of inflation. This recommendation would be applied across the board — in every area of spending and revenues — not just to Social Security.

Because of its extensive cuts to benefits, Simpson-Bowles was never approved by members of its commission, so the two chairmen released their own “partner” plan.

The Washington Post outlined that plan with some of these points:

• There are many tax increases in Simpson-Bowles: $2.6 trillion over 10 years, to be exact. That’s more than President Barack Obama ever proposed. It’s much more than the Republicans have ever proposed…
• According to CBPP calculations, Simpson-Bowles includes $2.9 trillion in spending cuts and $2.6 trillion in tax increases. That’s 1.1:1. If you add the $800 billion in projected interest savings to the spending side, then it’s 1.4:1.
• Simpson-Bowles turns the deductions for charitable contribution and mortgage interest into 12 percent, non-refundable tax credits. It caps the tax exclusion for employer-provided health care and then phases it out entirely by 2038. It eliminates the exemption for state and local bonds.
• Simpson-Bowles raises the gas tax by 15 cents.
• Simpson-Bowles cuts security (defense) spending by $1.4 trillion, not including drawing down the wars. That’s far deeper than what’s in the law now, far deeper than anything the White House or the Republicans have proposed, and deeper than the sequester cuts that so many think would devastate the military.
• Simpson-Bowles makes three main changes to Social Security. It increases the taxable maximum on income to 90 percent of all income, which raises $238 billion over the next decade. It uses a different measure of inflation to slow cost-of-living adjustments. It raises the retirement age to 68 in 2050 and 69 in 2075.

It’s already not easy to grow old, but it’s worse when corporate-focused politicians make us worry about cutting Social Security, already one of the lowest return public pension plans in the industrialized world – U.S. at 42% of average wages and Germany, for example, at 68%.

One thing’s for sure. If you want a decent retirement, Simpson-Bowles is not the answer.