In an interview with Dylan Matthews, Nobel laureate economist and Social Security expert Peter Diamond unloads on those who think the simplest and fairest way to "fix" Social Security is to raise the retirement age, which would particularly hurt seniors who retire early at age 62.
What do we know about the people who retire at 62? On average, they have a shorter life expectancy and lower earnings than people retiring at later ages. If anyone stood up and said, 'Instead of doing uniform across the board cuts, let’s make them a little worse for people who have shorter life expectancies and lower earnings,' they’d be laughed at.
Of course, those who say we should raise the Social Security retirement age -- either the age of eligibility or the age for full benefits -- don't get laughed at. It's considered a very thoughtful, courageous effort to deal with our entitlement programs. People who mention it often make a joke of how brave they're being. For instance, here's New Jersey Gov. Chris Christie (R) at an American Enterprise Institute event:
You are going to have to raise the retirement age for Social Security! Whoa! I just said it and I am still standing here. I did not vaporize into the carpeting.
Big applause, of course.
This is one of Washington, D.C.'s more disagreeable conceits. The people wandering around calling for a higher retirement age will never feel the bite of the policy. Think tankers and politicians and columnists don't retire at age 62, or even age 65. They love their work, which mostly requires sitting down in air-conditioned rooms. They stick around pretty much until they're about to die.
The courage it takes to call for a higher retirement age is the courage to say that other people who don't have it as good as you do should be the ones to pay to shore up Social Security. It's the same kind of courage as a poor person calling for higher taxes on the rich, or a sitting congressman calling for a war he'll never have to fight in.
Meanwhile, you could do more to erase Social Security's shortfall by simply lifting the payroll tax cap. A lot more. According to the Congressional Budget Office, raising the federal retirement age to 70 would solve about half of Social Security funding problem, while lifting the payroll tax cap would solve all of it.
As it happens, lifting the payroll tax cap would also end up costing eminent think tankers and journalists and lobbyists and politicians a whole lot of money. Perhaps consequentially, it's a rather less popular policy idea in this town. Many consider it an easy way out, even though it would be much harder on them. Courage and sacrifice for thee, but not for me.