The Congressional Cold War is in recess. Republican willingness to avoid a debt-ceiling fight for a few months has cleared the way for other activities. And while it's doubtful today's governmental glasnost will last very long, even a brief period of detente is welcome. For starters, it's forced the Twitterati to focus on other monumental issues, such as whether or not Beyoncé lip-synced her Inaugural performance.
It has also provided breathing room to the main combatants squabbling over key retirement issues. However, they will be spending the next several weeks sharpening their arguments and their rhetorical axes. Here are seven issues where the trench warfare could be especially brutal:
1. Should Social Security be included in the broader deficit debate? Social Security is spending more than it takes in, but not if you include interest on a special series of government bonds that were issued in exchange for the nearly $3 trillion current surplus in the Social Security trust fund. Of course, Congress spent that $3 trillion, and forking over the interest does boost the federal deficit.
2. Should the chained CPI be used to set Social Security's annual cost of living adjustment (COLA)? The chained CPI measures the cost of things consumers actually buy each month. The version of the CPI now used to set the COLA assumes consumers buy the same things every month regardless of price changes. By measuring the real-world behavior of consumers, who clearly buy lower-priced substitutes when prices rise, the chained CPI is generally considered the better measure of realistic consumer spending. However, neither index fairly measures what older Americans spend each month, primarily because seniors spend a much larger share of their budget on healthcare than younger people. AARP and other senior groups say using an experimental elderly price index (it's called the CPI-E) would be the fairest solution to seniors. It would raise the size of the COLA. The CPI issue may be a bargaining chip played in the bigger-stakes game of raising the retirement age.
3. Should the eligibility age for Social Security and Medicare be raised to 70? The influential Business Roundtable group of big-business CEOs recently added its voice to those calling for later eligibility ages. Entitlements defenders correctly note that changes amount to an effective benefit cut to early retirees. The Roundtable proposal stresses the need to protect low-income and disabled seniors. How much would its proposals generate in reduced spending? A spokeswoman says the organization is talking about this right now, but only as part of its lobbying efforts and not publicly.
4. Can federal deficits be reduced without meaningful healthcare service cuts? To date, Obamacare bureaucrats have "saved" billions of dollars for seniors, through lower drug costs and an impressive expansion of free wellness services. Of course, the healthcare industry has effectively been bankrolling these savings and it's not clear how much more they can or should be squeezed.
5. Should states accept expanded Medicaid services under Obamacare? Medicaid has become the Social Security of healthcare. Once intended as a limited-use safety net program for poorer Americans and their children, it has become a major healthcare provider, especially as the recession punished millions of households. Last year's U.S. Supreme Court ruling upheld Obamacare but said its enormous Medicaid expansion could be rejected without penalty by the states. After strong opposition from many Republican-led states, more and more are coming back to the feds seeking mutually acceptable ways for them to participate.
6. Are 401(k)s part of the solution or the problem? With the stock market moving toward its all-time high, concern has waned about whether Americans are being well-served by private retirement accounts. Despite rising account balances, however, studies continue to project that younger Americans will be even more poorly equipped to retire than today's aging baby boomers, who are facing very uncertain retirement futures.
7. Do we want to encourage or discourage immigration? Seniors have a stake in the nation's immigration policies. With more older people continuing to work well into their 60s and 70s, providing more foreign-born workers to compete with them is a concern. On the flip side, the caregiving needs of a surging senior population are likely to overwhelm current family and paid caregiving resources. Creating more caregivers via higher immigration quotas is one way to reduce the nation's growing caregiver shortage.
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