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-- -- security no doubt a lifeline for many Americans in the program celebrating its 75 anniversary tomorrow but as it begins a new year many wonderful make it another 75 years.
Recent polls show that many young Americans simply don't believe Social Security will be there for them here first on Fox Business interview is -- -- commissioner called security.
And John -- executive vice president of policy and strategy for the eight ARP.
Mike and John welcome to the program thank you very much for the invitation happy birthday thank you and will we be celebrating 75 more because the projections on depth.
-- don't look -- we will be I think one of the things have been a lot in this reporting on the status of Social Security so if you look at the trustees' report that was just released.
If nothing changes.
Will be able after 2037 -- 70% of benefits.
People hear the term exhaustion which is technical term natural reviews -- -- assume that we're broke that there's nothing there.
And particularly for younger people.
That discourages them.
And that's really not right so we knew we need to make its benefits would have to be -- there's some benefits would get a cut automatically but I think 22% that's right that's right and that's not a good result but that's -- the conversation.
Has to start now.
Because with a long times appear we're talking -- -- -- -- twenty -- -- priced right and we're still phasing in some of the changes from the big Greenspan report.
Of the early eighties so I mean.
If if the time to start that conversation.
In a civil fact based -- is now.
-- John answer this because young people in this country feel like they're giving up something or not gonna have it all.
To benefit those who are already retired retirees many of them.
Didn't get a cost of living adjustment but now want extra money on top of that want checks how do you answer that.
Well we have a moral obligation to younger people as well as the older people the keep the system's sound.
To keep the cash flow solid make sure that we don't have.
Those kind of projected.
And so the congress in the next few years needs to act.
And it can do some.
Fairly modest adjustments -- them while I cannot pick and tweak the contribution rate it can tweak the benefit formula can -- cost of living.
Minor things that very raise the retirement -- possible.
But I would recommend that but but nonetheless.
And it's something that can be easily fixed.
If congress can get its act together and act in the next couple of years and not wait gives plenty of time -- -- Everybody to have lots of lead time before anything happens.
-- this interview so -- we will get emails from people that call Social Security he's right and they're wrong if you don't say.
You're you're paying out that -- taken money in your pain and out now and it's a giant out of the emails out through our chain letter -- But there's a lot of inflammatory rhetoric -- Washington's filled with that these days.
You have to go -- need to be fair well I hope I thought I was -- -- that -- -- out but I think yeah but you know.
This is the most successful program probably in the history of the federal government is very popular with the American public.
They're radical proposals on the right radical proposals and left I don't think the American people want that's just as John said.
There's tweaking it needs to be done it's like a -- old house.
In the moment it starts to run down a little bit you know bring in a bulldozer and -- those -- -- you know you replace the wiring replaced the plumbing may be put a room on the back.
That's the kind of stage that we're in its Social Security in fact it's much easier.
To fix Social Security is president Obama's pointed out.
Then why has it happened we've been having this discussion.
Since the eighty's since I was.
-- -- -- -- -- -- -- -- Why haven't been -- the -- is crazy it's just money it's not people's health.
-- and done well.
Part of it -- -- -- step back and say -- this in some ways is a good problem we have this problem because people are living a lot longer because of medical advances.
And that and that brings the need for adjustment.
So we thought we had a longer term fix in the early eighties than we than we did.
The world has changed and primarily it's I think it's a good thing we're living longer.
So we have to figure out how to adjust for that we've known for a decade we need to make changes.
It's not a crisis.
Washington hasn't responded immediately we're getting to the point now where exactly is he said.
Younger people are losing confidence that's a bad thing.
And we need to start that discussion have changed now -- younger people have confidence that this intergenerational compact will be there.
We just today major poll on the anniversary of social security and what we found is although the younger people do have some skepticism about future.
Their support it's just a strong for the program as older people.
They know they're -- -- need it because they don't have a defined benefit pension they're not so sure about the market.
They can't count on our homes rising in value.
Social Security is the one thing that they're gonna really have to count on what one thing we've talked about extensively day -- -- -- the demographic shift that's coming and it's it's huge debt ratio for.
Retired workers to current workers continues to basically go up meaning that -- to be fewer workers to support each retiree.
Do you see.
A lot of conflict coming John between the retired and -- currently working we're gonna feel that they're supporting.
People too much.
But what I see as not conflict between the generations but I do see.
The need for people -- stay productive longer.
Today about half of people -- -- pretty benefits the year there are sixty to even though the normal retirement age of 66.
It would really help them personally as well -- a Social Security fund as well as the economy.
That people just work a few years longer.
And because of longer life spans that would do more than anything else to -- balance that ratio between retirees and the younger.
In the short run and I mentioned the no cost of living adjustment has been a great deal of outrage even some in congress.
Representative Earl Pomeroy wants -- -- -- -- checks for people.
What if there's a prolonged period of deflation in this country won't we need to cut the benefits.
-- if you don't cut them in a deflationary environment it's a bonus to people receiving Social Security -- hot.
-- personally don't think that extended to inflation is terribly likely right now under the statute.
We don't reduce benefits under extended to deflation that just -- the same.
If we had ten years of deflation we would have to obviously that would have an impact on the system -- would have to talk about it.
But that's not in the economic assumptions that the trustees and I honestly don't believe that that's a likely scenario.
One thing that people in DC have floated.
Is the idea of raising -- -- eliminating the cap on how much income is subject to the Social Security tax now opponents that say that's wrong because you're not thinking -- benefits just gonna transfer my money.
Do you support raising -- -- goes up a little bit pretty much every year but do you support eliminating -- or dramatically raising that cap either one.
Think -- we are in the administration is we're we're waiting for Simpson Bowles to set off the discussion on Social Security we don't have a proposal on the table now.
But we do believe that congress has got to focus on this on the -- and there are a limited number of ways to raise revenue a limited number of ways.
To cut benefits and that will clearly be one of the subjects of conversation on.
I think it's probably the most frequently discussed option when I talked to members of congress -- when we talk to the public.
Those pretty contributions are capped at all around a 106000.
You know it that it could go up.
Gradually not really hurt anybody I think it would certainly help the trust fund.
In people would get something back from those contributions it's not.
But some of that extra money to get distributed some people that's obviously -- -- taxing wealthy more to give it to other I think that's absolutely right but it's you know they do get something back at say contributory system.
But in the trustees' report and should this be in there workers don't have any way of finding out what they actually make their payroll taxes.
There's no annual rate of return in the trustees' report that I could fund should it be -- there.
We're we're trying to give the American public.
More much more information for financial planning purposes if you go to Social Security -- one of the things that we've done recently.
Is that you can now in an interactive way.
Do you scenarios based on your own actual personal earnings -- not a hypothetical.
And figure out if you retire at 62.
-- -- -- 65 UH seven to see what benefit you'll be giving you sit on Sam what -- last night for my money.
But let's remember Social Security is.
Disability insurance and life insurance not just the retirement program so I don't think culturally appropriate to look at.
Coming to put -- and then -- rate of return because that disregards the most important thing which is your family of secure.
If you die or if -- if if you look at investment alternatives it is important looked great but John is also right that that people think of us is just retirement.
We losses an enormous amount on -- -- most people are aware of that.
But people forget also about the survivors that's a lot of people -- -- my best friend passed away brain cancer 37 and his wife and -- I mean -- -- -- well and and mr.
-- you mentioned before one of the reasons he's so passion about the program.
And he grew up on survivors benefits and he feels believe that he would not have been able to go to college he would not be a member of congress today.
If he had not been able to -- lead a fairly normal childhood.
Because of Social Security's congressman Michael estrogen or others good discussion gentlemen thank you thank you -- tickets -- are questions out there now appreciate it.
Thank you thank you.
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