Like France, will US soon move to boost retirement age?
The prospect of a higher official retirement age infuriates many French. Boosting the age limit in the US is one way to help make Social Security solvent, many economists say. Would Americans be just as mad?
In France, the furor involves government plans to boost the minimum age for retirement benefits from 60 to 62, and the age for full benefits from 65 to 67.
The move would essentially put France in sync with America's current eligibility rules for Social Security. And it has been met with a storm of protest. By some estimates, 3 million French citizens have participated in sometimes-violent demonstrations and strikes over a measure the parliament could approve this week.
Could all this happen in the US?
Proposals to raise the retirement age, definitely. The riots and tear gas? Impossible to know.
Boosting age limits is widely seen by finance experts as a pragmatic way to put Social Security on a path of long-term solvency.
Americans are not as prone as the French to take to the streets over the age of retirement. Then again, Social Security isn't called the "third rail" of politics for nothing. It's possible that age-change proposals could be coupled with other tax or benefit adjustments that, together, would be deeply unpopular with many Americans.
One thing's for sure: This week's uproar in France symbolizes a financial reality that many advanced nations will have to face. Economic hard times in the wake of a deep recession are coinciding with long-run fiscal challenges that require politically difficult choices. Whether the country is America or France, there's more fuel for potential social unrest than there was five years ago.
The good news is Americans have a culture that emphasizes the virtue of working.
"We've always prided ourselves on our work ethic," says Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a nonpartisan group that promotes public discourse on fiscal issues.
That, coupled with public awareness of the nation's fiscal challenges, suggests less likelihood that millions of Americans might take to the streets in rage, she says.
In a September USA Today/Gallup poll, 77 percent of Americans said they agree that the rising cost of Social Security and Medicare "will create major economic problems" for the US in the next 25 years, unless changes are made to these entitlement programs.
That doesn't mean changes will go down like maple syrup.
The same poll asked what should be done if those costs do hurt the economy: 66 percent of Americans said the answer should not be to cut benefits, and 56 percent opposed raising taxes. (Raising the retirement age is, in effect, reducing benefits by another name.)
There's no telling when Congress or the White House will try to push the idea of a higher retirement age, but it could come into the news as early as this winter, when President Obama's bipartisan fiscal commission is expected to suggest budgetary reforms.
The president and Congress don't have to act on any commission recommendations, but its views could gain traction if the November election sends a signal that voters want to see serious action on the rising national debt.
Whether Washington feels the heat from voters or from financial markets, many economists say a day of reckoning can't be postponed for too many years. By the end of this decade, interest on the public debt could become a worrying annual expense.
Also, efforts to fix Social Security could come before Medicare, on the idea that tackling an easier problem will help pave the way for progress on the more intractable problem of health-care costs.
In a new report, Ms. MacGuineas and colleagues say that Social Security is "on a path to insolvency." The program is "running a cash flow deficit this year, and starting in 2015, it is projected to run cash deficits for every year in the future."
She says that, given people's longer lifespans, boosting the retirement age is an obvious place to start. The report suggests a one-year increase, followed by indexing the retirement age to changes in lifespans – perhaps boosting the eligibility age by a month every two years. But that would go only part way to restoring the program to health.
The report suggests other changes including a more accurate method of adjusting benefits for the cost of living, and slower-growing benefits for middle- and higher-income Americans.