Tags: Martin Feldstein | Social Security | Economy | Entitlements

Harvard's Martin Feldstein: Stop Dithering on Social Security

By    |   Sunday, 02 March 2014 04:22 PM

The obvious way to solve the Social Security crisis in the United States is to finally raise the retirement age and stop the political posturing on the topic in Washington, according to Harvard professor Martin Feldstein, a former chairman of the Council of Economic Advisers under President Reagan.

In a column for Project Syndicate, Feldstein said public pension programs are in financial stress around the globe – not just in Detroit – primarily because of rising life expectancy.

He noted that when the U.S. created its Social Security program in the 1930s, the legislation specified that benefits would be paid to retirees at age 65, when their ensuring life expectancy from that point was only a few years.

Editor’s Note: 38 Trades That Could Turn $1,000 Into $49,000

But life expectancy after age 65 rose after that by about one year per decade, and now stands at about 85.

“The increase in the number of retirement years put Social Security in financial trouble,” he said bluntly.

Back in 1983, when Feldstein headed Reagan’s economic council, Congress voted to gradually raise the age for full benefits from 65 to 67, but then made the threshold so gradual that it would be fully phased in only in 2027.

“When pollsters asked voters whether they would favor an increase in the Social Security retirement age to improve the program’s financial stability, the response was overhelmingly negative,” he noted.

The best course now would be to gradually raise the age for full benefits from 67 to 70, Feldstein said.

“It would be even better to avoid future political posturing by enacting legislation now that automatically raises the eligibility age for full benefits in such a way that average life expectancy at that threshold (after age 65) is kept constant, at 15 years.”

In an editorial, USA Today noted President Obama did not include a cut to future Social Security benefits in his proposed budget last week.

A proposed cut would have meant altering the formula for calculating annual cost of living
increases for retirees and other beneficiaries.

“If liberals have their way, the next budget will instead include proposed increases to these
retirement benefits,” USA Today said.

The editorial noted neither Republicans nor Democrats want to be blamed for cutting Social
Security benefits, and called for other tax and spending measures to keep the system solvent.

Editor’s Note: 38 Trades That Could Turn $1,000 Into $49,000

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Economy
The obvious way to solve the Social Security crisis in the United States is to finally raise the retirement age and stop the political posturing on the topic in Washington, according to Harvard professor Martin Feldstein.
Martin Feldstein,Social Security,Economy,Entitlements
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2014-22-02
Sunday, 02 March 2014 04:22 PM
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