The Business Roundtable, which represents chief executives of
major U.S. companies, proposed shoring up Social Security and Medicare by raising the eligibility age
without increasing taxes on income subject to the Social Security payroll tax.
For Social Security, the group’s plan released today in Washington would
gradually raise the retirement age to 70 from 67, scale back benefits for
wealthier recipients and switch to a method of calculating inflation that would
result in lower cost- of-living payments for current and future retirees.
“We have tried to gather three or four very pragmatic, despite their
political firepower, relatively straightforward proposals that do the trick,”
said Gary Loveman, chief executive and president of Caesars Entertainment Corp.,
chairman of the group’s health and retirement committee.
“This proposal dovetails very nicely with the demographic realities of the
workforce,” said Randall Stephenson, chairman and chief executive of
AT&T Inc. “We are going to need our employees to work longer just to fill
the needs that we have in the work force.”
The group also offered a plan for the Medicare health program for the elderly
that would raise the eligibility age to 70 and create a system of private plans
to compete with the government-sponsored program. The proposal is similar to
that proposed by House Republicans as part of their budget and was rejected by
the Democrat-run Senate.
Means Testing
The business group proposed expanding means testing in Medicare, or reducing
benefits for upper-income recipients.
In rejecting new tax
revenue as part of the plan, Loveman said the income base on which Americans
pay Social Security payroll tax would have to increase “very substantially to
draw a sufficient level of revenue to address the long-term solvency of the
program.” That “would be far more damaging to economic growth than what we’re
asking people to consider,” he said.
The plan comes as Congress prepares for another round of battles over fiscal
issues, this time raising the nation’s borrowing limit and heading off automatic
spending cuts it delayed until the end of February.
Business groups including the roundtable are calling for Congress to address
the shortfall in funding for Social Security and Medicare as part of any
debt-reduction plan.
Still, neither political party has shown signs it would make the political
tradeoffs to advance entitlement changes through the Republican-led House and
the Democratic-controlled Senate.
The group’s proposal to switch Medicare to a system of private plans that
compete with the government program may be particularly unworkable in the
current congressional climate.
‘Almost Dogma’
“This has been almost dogma that: ‘we don’t want to do this,’” said John Engler, a former Michigan governor and president of
the Business Roundtable. “It is a discussion that’s very important to have. It
wasn’t that many years ago that choice in education was unthinkable.”
Today Medicare, Medicaid and Social Security account for 42 percent of the federal
budget. By 2020, they are estimated to account for half.
The Business Roundtable has long opposed efforts to reduce the budget deficit by raising business taxes, maintaining that
such an approach would make U.S. companies less competitive globally.
-- Editors: Jodi Schneider, Robin Meszoly
To contact the reporter on this story: Heidi Przybyla in Washington at hprzybyla@bloomberg.net
To contact the editor responsible for this story: Jodi Schneider at Jschneider50@bloomberg.net