The Romney heavyweights say that a President Romney will “gradually reduce growth in Social Security and Medicare benefits for more affluent seniors.” Thus Romney’s plan proposes some “means testing” of Social Security and Medicare, meaning seniors who have greater “means” would receive fewer benefits. Although not written specifically into his economic plan, Obama has also indicated a willingness to consider means testing of these programs.
On this point, Romney and his economic advisers are right. As I proposed in a June 2011 op-ed in this publication, a partial solution to the funding problem with these programs is to “phase-out” the entitlements under these programs as a retiree’s broadly measured income increases from $75,000 to $175,000. Canada, which does not have the same type of debt and deficit problem faced by the US, has a similar phase-out and means testing for its Social Security equivalent.