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BRIDGE BRIEFING: Romney And Social Security

Romney Will Raise The Retirement Age

Romney Said That Social Security Must Be Reformed By Gradually Raising The Retirement Age And By Using Progressive Indexing. According to the Concord Monitor, “But he said Social Security must be reformed for future recipients who are in their early 50s and younger. Romney offered two ideas: gradually raising the qualifying retirement age and using progressive indexing, which slows the increase in benefit levels for high earners by tying the increase to the price index, rather than the quicker-growing wage index now in use.” [The Concord Monitor, 8/16/11]

Romney Proposed Gradually Raising Retirement Age Based On “Increases In Longevity.” According to Romney’s Plan to Turn Around the Federal Government, “Gradually raise the retirement age to reflect increases in longevity.” [Romney’s Plan to Turn Around the Federal Government, 11/4/11]

Romney Wrote That It Was Logical To “Gradually Increase The Retirement Age.” According to his book “No Apology” Mitt Romney wrote “Alternatively we could gradually increase the retirement age. This does have a certain logic to it: The average American’s life expectancy has risen by more than ten years since Social Security was created. Increasing the retirement age by even one or two years would help get the system closer to sustainability. Because some people would be physically unable to work beyond today’s retirement age, the system would have to allow for exceptions, but most people I know in their sixties want to keep working; they’re simply happier when they do. I keep hearing that “sixty is the new fifty”—at least that’s what I’ve been telling myself for the last few years. Many older Americans are healthy, vital, and want to stay engaged in meaningful work. If we increased the retirement age, we would encourage seniors to stay healthier longer, keep their minds active and alert, and at the same time, we would relieve the terrible Social Security burden our children and grandchildren face.” [“No Apology,” 2011, Pg. 173-174]

Romney Will Cut Social Security Benefits

Romney’s Social Security Reform Would Require “Excessive” Benefits Cut To Offset No Additional Revenue. According to Bloomberg, “The basic contours of Mitt Romney’s approach to Social Security reform are coming into focus, and the results aren’t pretty. Because Romney insists that any change include no additional revenue, his strategy is forced to rely on excessive benefit cuts that would undermine financial security for future retirees. A much better approach would mix benefit reductions and revenue increases, as we have proposed in the past, and as polls show the public prefers. For about two-thirds of elderly Social Security beneficiaries, the payments amount to more than half their overall income. These benefits are protected against financial-market fluctuations and inflation, and they last until death. So they are a crucial form of insurance, almost impossible to purchase, and they are particularly useful during and after periods of severe economic stress, like the one we have lived through these past few years.” [Bloomberg, 3/27/12]

Romney’s Approach To Social Security Reform Matched The Plan Proposed By Lindsey Graham, Rand Paul, And Mike  Lee. According to Bloomberg, “Romney has not yet filled in the details, but his approach appears to match the ‘Social Security Solvency and Sustainability Act’ proposed last year by Republican Senators Lindsey Graham of South Carolina, Rand Paul of Kentucky and Mike Lee of Utah.” [Bloomberg, 3/27/12]

The Plan From Graham, Paul, And Lee Would Raise The Retirement Age And Use “Progressive Price Indexing” To Reduce Benefit Growth For The Top 60 Percent Of Earners.  According to Bloomberg, “That plan would, by 2032, raise the normal retirement age under Social Security from 67 to 70, and it would adopt ‘progressive price indexing,’ which would reduce the future growth rate of benefits for the top 60 percent of earners. (Their initial retirement benefits would partly reflect inflation but not overall wage growth during their careers.) Lower earners would be affected by the increase in the normal retirement age but not the progressive price- indexing component. Middle earners would be affected by both components, but the progressive price indexing would be less severe for them than for the highest earners.” [Bloomberg, 3/27/12]

Under The Proposal, By 2050, Medium Earners Retiring Would Receive 32 Percent Less In Benefits And High Earners Would Receive 40 Percent Less. According to Bloomberg, “These two steps would eliminate the long-term deficit in Social Security, according to the official analysis of the plan done by the Office of the Chief Actuary at Social Security. But they would do so by substantially reducing benefits, even for middle earners. According to the analysis, a medium earner (someone bringing in about $45,000 a year today) retiring in 2050 at age 65 would receive 32 percent less in annual benefits than under the current formula. By 2080, the reduction would amount to almost 40 percent. A high earner (someone with income of about $70,000 currently) retiring in 2050 would get 40 percent less and, by 2080, almost 50 percent.” [Bloomberg, 3/27/12]

Romney Supported Cutting Social Security For Higher Income Seniors

Romney Would Slowly Increase The Retirement Age And Lower The Benefit Growth Rate For Individuals With Higher Incomes. According to Bloomberg, “Romney’s website identifies two steps he would take: ‘First, for future generations of seniors, Mitt believes that the retirement age should be slowly increased to account for increases in longevity. Second, for future generations of seniors, Mitt believes that benefits should continue to grow but that the growth rate should be lower for those with higher incomes.’ The website adds: ‘Mitt’s proposals will not raise taxes and will not affect today’s seniors or those nearing retirement.’” [Bloomberg, 3/27/12]

Romney Suggested Making Social Security Solvent By “Having A Lower Rate Of Inflation On The Calculation Of Initial Benefits For Higher Income Individuals.” According to a “Glenn Beck” transcript, Romney said, “Those are the three major levers you have, changing the retirement age, giving people more of their income going in or their Social Security withdrawal going into private accounts, and having a lower rate of inflation on the calculation of initial benefits for higher income individuals. Those are the arithmetic ways to make this work. Other than having a tax increase. And the problem with a tax increase is you slow down the economy, which is the last thing you need in this nation.” [Glenn Beck, 1/16/08]

Romney Wanted To Index Social Security Using The CPI For Higher Income Beneficiaries. According to the Washington Post, Romney wrote in an op-ed, “Rule Two: Go where the money is. With entitlement spending about half of all federal spending, the president has no choice but to address Social Security, Medicare and Medicaid. He should propose less costly progressive indexing for future Social Security beneficiaries – using the consumer price index inflator rather than the wage index for higher-income retirees.” [Washington Post, 11/3/10]

Romney Supports Private Accounts For Social Security

Romney Supported Creating Private Investment Accounts. According to the Boston Globe, “Romney is supportive of raising the retirement age, as well as allowing workers to direct a portion of their paycheck into individual investment accounts – rather than shipping it to the government to pay benefits for current retirees. ‘Increasing the retirement age by even one or two years would help get the system closer to sustainability,’ Romney writes in his book ‘No Apology,’ as he outlines several options he thinks could put Social Security on sounder financial footing. ‘Most people I know in their ‘60s want to keep working; they’re simply happier when they do.’” [Boston Globe, 4/11/11]

Romney Wrote That Individual Accounts Were An Option To Solve Social Security. According to his book “No Apology” Romney wrote “Individual retirement accounts offer a fourth option, one that would allow today’s wage earners to direct a portion of their Social Security tax to a private account rather than go entirely to pay the benefits of current retirees, as is the case today. The federal government would make up for its lost Social Security revenue by borrowing that amount through the sale of treasuries, just as it currently does for the rest of its deficits. Owners of these individual accounts would invest in a combination of stocks and bonds and—presuming these investments paid a higher rate of return than the new treasuries—the return on these investments would boost the payments to seniors. I also like the fact the individual retirement accounts would encourage more Americans to invest in the private sector that powers our economy. [“No Apology,” 2011, Pg. 175-176]

Romney’s Spokeswoman Andrea Saul Said Romney “Never Supported Privatization Of Social Security As It’s Commonly Understood.” According to the Boston Globe, Mitt Romney’s spokeswoman Andrea Saul said “Governor Romney has never supported privatization of Social Security as it is commonly understood, meaning the total privatization of all Social Security… He does believe in allowing individuals, on a voluntary basis, to invest in private accounts.’’ [Boston Globe, 9/9/11]