Most political leaders pay lip service to pressing national or fiscal issues only to pass the buck to their successors. Clinging onto political life seems like a far better proposition than touching the “third rail” and getting zapped. French President Emmanuel Macron has bravely tacked in the opposite direction with an electrifying campaign to reform France’s pension system. Reuters’ Caroline Pailliez and Ingrid Melander report that Macron is under fire from protesters and political opponents for proposed reforms that would push France’s retirement age two years longer to 64. One million French workers have taken to the streets despite clear indications that the status-quo is not sustainable.
American policymakers would be wise to learn from Macron’s brave stand and embrace much-needed entitlement reforms. The U.S. has no long-term strategy for reducing trillion-dollar deficits and reining in the resulting inflation. Social Security, Medicare, and Medicaid will account for roughly 90% of new spending over the next 10 years, yet there’s little political will to make any changes to these programs. President Joe Biden and lawmakers should learn from the “chef d’État”and save the U.S. from fiscal calamity.
America’s largest entitlement programs have remained largely unchanged since the New Deal and Great Society. The Social Security Amendments of 1983 did implement a gradual increase in the Social Security (SS) retirement age (from 65 to 67), and individuals who turned 62 in 2022 now must wait another five years before getting full benefits. But, just as before, individuals can start taking SS benefits at age 62 as long as they are willing to collect less benefits leading up to the full retirement age.
The Medicare eligibility age has remained stuck at 65 since then-President Lyndon B. Johnson signed the Medicare Act into law in 1965. Putting the Medicare age back on parity with the full SS retirement age would have significant budgetary benefits. The federal government would likely raise the age gradually, perhaps by three months per year. Once the age hike was fully implemented, taxpayers would save about $20 billion per year or $200 billion over a 10-year period. Even if the flow of federally funded health insurance subsidies increased to cover low-income residents aged 65 to 67, the federal government would still save roughly $100 billion. Raising the early retirement age of SS from 62 to 64 could likely save around $150 billion over 10 years, depending on the assumptions being used.
Critics of these proposed changes rightly point out that life expectancy can vary significantly by income, and age hikes may disproportionately harm the poor. Congress can rectify that issue by linking benefits to workers’ incomes, and even having an earlier retirement age for workers below the poverty line. And, as pointed out earlier, measures such as health care subsidies can help plug the benefits gap for workers aged 65 to 67 while keeping fiscal savings intact. Lawmakers need not choose between righting America’s fiscal ship and keeping its promise to help citizens in need. Such reforms certainly won’t be easy. As seen by former President Donald Trump’s recent, misguided remarks, opposition would not be confined to the left.
Doing nothing is not an option. America’s political leadership should take a page from Macron’s playbook and come out boldly in favor of entitlement reform. Taxpayers deserve a government that works for them instead of making excuses and passing le buck.
David Williams is the president of the Taxpayers Protection Alliance.