Social Security: A Challenge for Obama

It was part history lesson and part policy discussion as a panel of experts examined the current state of Social Security and Medicare at the annual meeting of the Gerontological Society of America, held near Washington, D.C., Nov. 21 to 25.

Speaking on Saturday, former Social Security Commissioner Kenneth Apfel said that with a Barack Obama administration taking over, tackling what needs to be fixed about Social Security may have a chance. “Obama’s approach is a good first step,” Apfel said. Obama has proposed that those who earn more than $250,000 a year contribute more to Social Security.

Apfel, now at the University of Maryland, was joined on the panel, “Social Security: Robert M. Ball’s Legacy to the Future,” by Ball biographer Edward Berkowitz and University of Wisconsin assistant professor Pamela Herd.

Social Security was the lifelong passion of Bob Ball, who died earlier this year at age 93. Ball was first appointed Social Security commissioner by President John F. Kennedy in 1962 and stayed in the post longer than any other commissioner, until 1973.

But his connection with Social Security started in 1939 when he became a field representative, the group’s lowest-ranking professional job. He worked his way up and at age 58, after he left the Social Security Administration, he reinvented himself as a consultant and “guru on Social Security,” according to Berkowitz. It was in that role that Ball helped broker the last big deal on Social Security in 1983. But now more changes are needed.

“Social Security’s solvency challenge is solvable,” Apfel said. But more than a tax increase may be needed, given the challenges also facing Medicare. One of the chief architects of the Medicare program as well, Ball came to its aid several times after its creation.

Berkowitz described Ball as both a visionary, who could think ahead to prepare for the next five years of Medicare, and a micromanager who worried about details such as how much water to have in a glass on the podium so that it provides enough to drink without spilling.

Herd focused on the large number of women receiving Social Security benefits based on a spouse’s or former spouse’s earnings—approximately 60 percent of all female beneficiaries. It’s not that they didn’t work or qualify for benefits on their own, she said. It’s because men’s earnings are still significantly higher, so many women receive more money by claiming benefits based on their spouses’ earnings. Only 2 percent of spousal and survivor benefits go to men.

One of the problems with marital status benefits, Herd said, is that they don’t provide greater benefits for those who need them the most, which is contrary to the basic structure of Social Security. Social Security replaces a greater proportion of earnings for low-paid workers than it does for high-paid workers. For example, she explained, a wife who never worked but whose husband was a high earner could draw greater marital benefits than a working mother who was a waitress.

The importance of marital status benefits to women’s retirement security doesn’t seem likely to change even for young women in the workforce now, Herd said. “We have to keep them,” but we also need to think about how to make their distribution fairer, she said.

Two possible fixes are creating a minimum benefit or providing a credit for raising children or taking care of older relatives, she suggested. Women’s lower Social Security benefits generally result from a combination of lower pay and time off from the workforce.

Much of the discussion focused on whether there was a need to raise the earliest eligibility age from 62. If the age is raised, said Apfel, there needs to be some liberalization of Social Security’s disability provisions to protect those who are too sick to work.

Workers who take Social Security at age 62 get lower benefits than they would if they waited until they were fully eligible for benefits. For each year after age 62, benefits increase by about 8 percent, and workers can postpone taking Social Security up to age 70.

Restructuring Social Security “ought to be a priority” for the Obama administration, said Apfel. But, noting the crisis-strewn landscape, he added, “it won’t be the first.”

See Also:
• Why Congress May Be Ready to Reform Health Care
• Fixing Health Care: What Role Will Medicare Play?
• Older Americans Go Back to Work–If They Can Find a Job
• What Do You Have to Give to Your Country Now?

Martha M. Hamilton, formerly with the Washington Post, writes a regular column, Your Financial Future, for AARP Bulletin Today.