Are All Americans Living Longer?

CNBC didn’t ask the right questions

A few days ago, CNBC’s Squawk Box turned its show over to a gab-fest between two VIPs in the Social Security debate—Alice Rivlin, who was OMB director in the Clinton administration and is a current member of the president’s deficit commission, and former comptroller general David Walker, who heads a foundation established by Peter Peterson, the former investment banker who has been waging a well-greased campaign to change Social Security. (Peterson is a CJR funder.)

The squawking took a serious turn when Walker asked Rivlin how she thought we might first tackle some of the country’s big economic issues—budget controls, health care costs, reforming Social Security. Rivlin jumped right to Social Security. Reforming it, she said:

wouldn’t hurt anybody who’s retired now or about to retire. But, in fact, people are living longer and longer, and we’re going to have to recognize that we can’t support people for such a long time—that they’re able to work longer because we’re all healthier. So raising the retirement age for Social Security, changing the way benefits are calculated, especially for upper income people, maybe raising the tax a little bit, to put Social Security on a sound footing, that would be a high priority for me.

Why? She went on: “Because I think that would send a message to our creditors around the world that we’re serious about making long-term change.”

Whew! Rivlin packed a lot into that answer, but some assertions went unchallenged and some code words didn’t get any follow-up or explanation. That’s not the Squawk Box way. And at the end, after Rivlin predicted that Congress would vote on the commission’s recommendation, co-host Rebecca Quick offered her own bit of editorial expertise. “Let’s hope they listen up,” she told her viewers. Let’s hope other journalists or talk show hosts do a better job of getting all the facts and context out to ordinary people, who have a mighty big dog in this fight.

For starters, it’s important to dig beneath the logical-sounding statement that Americans are living longer and are healthier. Yes, in general longevity has increased, and medical technology has made it possible for some people to live longer. But there’s more to the story, and that’s the part that didn’t get aired on Squawk Box. Rivlin said there’s a need “to adjust Social Security a little bit to the modern fact that we’re all living longer and can work longer.” All?

“Most of the increase in life expectancy in retirement has been among high income men,” explained Monique Morrissey, an economist at the Economic Policy Institute, a non-partisan think tank focusing on the concerns of low and middle income Americans. She pointed me to a study (pdf) done by the Social Security Administration which found that a man in the top half of the earnings distribution who retired at age sixty-five in 2006 could now expect to live nearly another twenty-two years, compared to a man who retired at the same age in 1982, whose life expectancy was only seventeen years at the time. But a man with earnings in the bottom half of the distribution retiring in 2006 could expect to live only sixteen years longer. The same man with lower earnings retiring in 1982 would have been expected to live only about fifteen more years.

So, over the decades, the top earners got five more years of life expectancy, compared with only one year for those at the bottom—reflecting the widening disparities in the country. The Social Security study didn’t look at women, but Morrissey told me that life expectancy for women hasn’t grown as much as for men. Research shows that the general pattern appears to holds for women as well.

So what does this mean if the age at which a person is eligible for full retirement benefits is raised? It amounts to a benefit cut, Morrissey explained, again citing Social Security Administration data showing that raising the current age for full benefits to sixty-seven (which is the current law) amounts to about a 13 percent benefit cut over those two years (from sixty-five to sixty-seven). Cuts would be similar if the retirement age is raised even higher.

Raising the age of eligibility for full benefits might not hurt investment bankers, doctors, lawyers, and other well-educated professionals. But doing so for those in the middle and near the bottom is another matter, especially since many people no longer have good pension plans from their employers. Rivlin also signaled that upper-income wage earners may see some adjustment in the way their benefits are calculated. Was the word “adjustment” another code word? Did she mean reducing benefits for the higher earners or means-testing them? That’s what some Social Security supporters fear could destroy the program’s social solidarity, with ramifications for workers now in their thirties, forties, and fifties. The Squawk Box segments sure raise a lot of questions for reporters to answer.

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Trudy Lieberman is a longtime contributing editor to the Columbia Journalism Review. She is the lead writer for The Second Opinion, CJR's healthcare desk, which is part of our United States Project on the coverage of politics and policy. She also blogs for Health News Review. Follow her on Twitter @Trudy_Lieberman.