2008-10-01 / Seniors

The Savvy Senior

Presidential Candidates' Stands On Social Security, Medicare

Dear Savvy Senior,

Where do the presidential candidates stand on Social Security and Medicare? I'll be eligible for these programs in a few years and haven't been able to find anything on their positions.

Senior Voter

Dear Voter:

You would think that Social Security and Medicare, the government's huge entitlement programs that affect the pocketbooks of nearly every single voting American, either in taxes paid or benefits received, would get significant attention on the campaign trail. But that's not the case this year.

Presidential candidates Arizona Senator John McCain and Illinois Senator Barack Obama have devoted little time this election season to talking about Social Security and Medicare. That may be because both programs (especially Medicare) are in dire need of reform, and the solutions aren't likely to make voters particularly happy. Here are the problems that exist and where the candidates stand.

Social Security

Social Security is facing a long-term funding problem. By the year 2017, Social Security will start taking in less in tax revenue than it has promised to pay out in benefits. That's because the massive baby boomer population will be retiring in droves and by 2041, the system will be able to pay out only 78 percent of promised benefits. To fix this financial shortfall, experts have recommended a variety of solutions including:

Raising taxes. Social Security trustees estimate that Social Security could be made solvent for the next 75 years by increasing workers' payroll (FICA) tax to 14.1 percent. It's currently 12.4 percent, split between workers and their employers, up to a wage cap of $102,000 in 2008. The cap rises every year with inflation. Earnings above that aren't taxed for Social Security.

Curbing benefits. This could be done by lowering annual cost-of-living adjustments or by raising the retirement age (currently set to rise to 67 by 2027) to 70.

Creating private accounts. This is what President George W. Bush rolled out in 2005 but it didn't take hold. It gives workers the option of diverting part of their Social Security taxes into private accounts to invest in stocks, bonds, and/or mutual funds. However, critics argue that privatizing Social Security does little to address the long-term funding concerns.

Here are the candidates' positions.

Obama strongly opposes individual private accounts and is against curbing benefits or raising the retirement age. He believes one way to help shore up Social Security is to implement a payroll tax of 2 to 4 percent on workers earning over $250,000 a year, starting in 2019. Half of the tax would be paid for by employees and half by their employers.

McCain believes the best way to fix Social Security is by curbing or slowing the growth of benefits rather than raising taxes. He has also indicated he could embrace an increase in the retirement age, and supports optional and vol-

untary private accounts as a way to supplement Social



Due to skyrocketing healthcare costs, people living longer and 78 million baby boomers, who will start becoming eligible in just two years, Medicare faces much greater financial problems than Social Security that are much more difficult to fix.

Experts suggest, and both candidates agree, that fixing Medicare has to be part of an overall change to the entire healthcare system. Here's what else they offer on the topic.

McCain has proposed a major overhaul of Medicare's payment system, paying health care providers not by each individual service they perform, but by how successfully they treat their patients. He also has proposed making wealthier Medicare beneficiaries pay more for their benefits, starting with the Part D prescription drug benefit.

Obama wants to improve efficiency and reduce waste in the Medicare system, including eliminating subsidies to the private insurance Medicare Advantage program. He also wants to help bring down the price of drugs under the Part D prescription drug benefit by allowing Medicare to negotiate with drug companies for better drug prices like the Veterans' Administration does. He would also like to expand Medicare, in a sense, making a Medicare-like program available to those under age 65 who don't have insurance.

Savvy Tip: To learn more about the candidates' positions, visit www.barackobama.com and www.johnmccain.com.

Send your senior questions to: Savvy Senior, P.O. Box 5443, Norman, OK 73070, or visit www.savvysenior.org. Jim Miller is a contributor to "The NBC Today Show" and author of The Savvy Senior books.

The Gazette does not endorse the contents of The Savvy Senior. Check with professionals about the contents of this column.

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