Tuesday, November 20, 2012

The Republican Party & Entitlements

It is often said that dealing with Social Security and Medicare is the third rail of politics and therefore impossible to do and survive.   Yet, both these Entitlement Programs are going bankrupt and so failure to deal with them in a thoughtful way will ensure their demise.   This is an opportunity for the Republican Party to offer common sense ideas that will insure that these programs are there for generations to come.  To do so, first the American people must be convinced of the gravity of the problem.  

75 million Baby Boomers are beginning to retire, which will place immense financial strain on both Social Security and Medicare.   If these programs are not modernized for future generations, they will go bust.   It is just that simple.   So, no changes for people 55 or older that don't have time to adjust to any changes.   However, for Americans who are younger, there must be meaningful change.   First, early retirement and ability to start taking Social Security should be at 65, not 62 to conform to the age Medicare is applicable.   The full retirement age should be at 68 graduating up to 70 for Americans under 30.  

When Social Security came into being in the 30's, life expectancy was 62.  Today, people are living to be 85 or more.   If anything, with modern medicine, life expectancy will only increase.   Young people today are likely to live to be 90 or more, on average, so taking the retirement age up to 70 for full benefits is warranted.   Further, those under 55, should be given the choice of either keeping all their retirement contributions in the current Social Security system, or taking their half each month and adding it to a 401K.   While the employer's half would remain in the Social Security System, the employee's half could be invested as the employee sees fit to get higher returns than are typical with Social Security.  This makes perfect sense for younger employees that still could retire early at 65 years old if they so choose by accessing their personal accounts. 

Further, the fraud and abuse related to Disability benefits that come out of the Social Security Trust Fund must come to an end.   Many of the 9 million people receiving Disability benefits are neither mentally, nor physically disabled.   People on Disability for things like high blood pressure, a common ailment, must stop.   These people are fully capable of working and so they should not be on Disability taking money out of the Social Security Trust Fund.  It is time for tough love related to these people. 

Finally, Medicare, which is already means tested, should be further means tested for wealthier Americans so that those that can afford to do so are paying up to 50% of the cost.   While the "rich" have paid for their Medicare coverage many times over while working,  this trade off is necessary to insure that the poor have adequate Medicare coverage after retirement.   Yes, it is redistribution of income; but so be it. 

It is time for Entitlement Reform and the Republican Party should lead the way.   These common sense ideas will insure that both Social Security and Medicare are solvent for current recipients and for future generations.   It is time to get this done. 

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