Those who consider themselves Social Security mavens know the name Erskine Bowles. Bill Clinton’s former chief of staff, and currently president of the University of North Carolina system, Bowles has teamed up with former Wyoming Sen. Alan Simpson to head the newly created deficit reduction commission. The president tasked the commission with finding ways to reduce the federal deficit and reforming the country’s two most popular social programs—Medicare and Social Security.
Both Simpson and Bowles are making their way back into the limelight, so it won’t be long before the media, which we know plays a good game of follow the newsmaker, will soon be covering what they say. Bloomberg began last week when it covered Bowles’s speech to the North Carolina Bankers Association’s annual Bank Directors Assembly. Like his sidekick Simpson, Bowles didn’t mince words, saying:
We’re going to mess with Medicare, Medicaid and Social Security because if you take those off the table, you can’t get there. If we don’t make those choices, America is going to be a second-rate power, and I don’t mean in fifty years. I mean in my lifetime.
Boy does that sound dire, since Bowles already sixty-four; Simpson, for what it’s worth, is seventy-eight. A live-blog on the Web site of the Charlotte Business Journal shared more of Bowles’s thinking. “We’re going to come out of this commission not very popular. Everything is on the table,” he said.
Does that mean we are overpaying Social Security beneficiaries? And will future retirees get even less? For the record, note that today the average monthly benefit for all workers is about $1150. This year, the average monthly benefit for a sixty-five-year-old worker who retires is about $1,373; the highest benefit for someone retiring at sixty-five is $2155.
Most workers, though, take their benefits early, at age sixty-two or sixty-three. That, of course, gives them a lower monthly payment—75 percent of what they would have received at their full retirement age. Which brings up another question: Will the age at which they can receive full benefits rise even higher than where it is now? Former Tennessee congressman Harold Ford, who is flirting with a political comeback, has urged people under age forty-five to forfeit their benefits until age seventy, and he boasted that he was going to do just that. In Ford’s reformed world, he would allow someone to break the pledge at age sixty-six, but only for economic hardship.
The press has lots to chew on here. This issue affects nearly every man, woman, and child in America. Yes, kids get Social Security survivors’ benefits when a parent dies, and many families are kept afloat by those payments. Some experts say that reducing benefits, which Simpson and Bowles seem to suggest as an option, will indeed cause economic hardship for people already receiving benefits, and even for those who are fifteen or twenty years away from it. Most people no longer have the solid, defined benefit pension plans that once could be counted on to supplement Social Security income. Those so-called Cadillac pension plans began disappearing years ago, replaced by the much more meager and volatile 401(k) plans. This does kind of sound like the health reform bill, which will begin to phase out these good insurance plans for workers in the years ahead.