Where Obama, Romney stand: The differences behind the campaign rhetoric.
The federal government has a long-term budget problem: More than 40 cents of every dollar it spends goes to retirees — mostly for Medicare and Social Security — and as the huge baby boom generation ages, those programs take an ever-larger piece of the pie.
Three ways exist to deal with that problem: Faster economic growth would make the pie bigger. Alternatively, there are tax increases or benefit cuts.
Social Security is the easier of the two programs, because its costs aren’t rising as quickly.
Republican presidential nominee Mitt Romney proposes that the Social Security eligibility age, already rising to 67, be increased by a couple of years, starting with people who are younger than 55.
He also would change the way benefits are calculated so that they grow more slowly for retirees whose earnings put them over an income threshold. Romney hasn’t said where the threshold would be. To make the plan work, however, a large percentage of retirees would have to be affected.
Under one prominent Senate GOP proposal similar to Romney’s plan, retirees in the top 60 percent of earners — those making more than $43,412 in 2018 — would get less than they would under current law, according to an analysis by the Social Security actuary. Benefits for some recipients would be lower by 30 percent or more.
President Barack Obama has made no proposal on Social Security. Democrats in the past have proposed increasing revenues by raising the level of earnings subject to the Social Security payroll tax.
During budget talks with congressional Republicans this past summer, White House aides discussed reducing future benefits by changing how cost-of-living increases are calculated, but pulled back after opposition from Democrats in Congress.
For now, all White House aides will say is that Obama might be willing to consider some changes in Social Security, but that he would insist that any savings go to bolster Social Security’s long-term finances, not to reducing the overall deficit.