Not a drop of blood was drawn. In fact, a hint of bipartisanship made its appearance last month at a Senate subcommittee hearing on how the U.S. should tackle its retirement crisis.
Democratic and Republican senators alike agreed that the traditional three-legged stool of retirement security Social Security, pensions and personal savings is critical to a successful retirement strategy.
The tone of the conversation was set by Sen. Sherrod Brown, D-Ohio, and Sen. Patrick Toomey, R-Pa., who agreed that Social Security, in some form, needs to remain in place to protect the elderly, disabled, extended families and children.
Brown noted that “the budget debate creates a vacuum that does not take into account the economic impact of Social Security programs. Yes, Social Security benefit cuts will decrease our 10-year deficit, but such cuts do not consider the impact on seniors, their families, which then must support them, and current middle- and low-income workers.”
He added that “shifting the costs from the federal ledger does not resolve our retirement and savings problems.”
Toomey agreed that “government policy should protect all three pillars of retirement security, recognize the strengths of the retirement system and preserve what works.”
He added that it is necessary to “protect programs that seniors rely on.”
On the other hand, Toomey said, something does need to be done about Social Security because it is “insolvent in its current form.”
Robert Romasco, president of AARP in Washington, D.C., said at the hearing that his organization has done a study on the impact of Social Security benefits on the economy. It found that for each dollar paid to beneficiaries, there was $2 in spending, adding $1.4 trillion to economic output in 2012.
When talking about the three-legged stool of retirement, Romasco said that unfortunately, “Social Security is the sole dependable leg.” He pointed out that traditional pensions have gone away, retirement income has shrunk, wages are down, health care costs are soaring and 50 percent of the workforce have no employer-provided retirement plan.
“Financial security is in jeopardy. Unless we reverse the trends of stagnant wages, Social Security may be the only source of retirement income for our families,” he said.
Ed Ferrigno, vice president of Washington affairs for the Plan Sponsor Council of America, also attended the hearing. He felt it was “fairly well balanced” – and was surprised at the amount of time spent talking about how to save Social Security.
“I’m not aware of any efforts anywhere to take down Social Security,” he said. “To the degree they were defending Social Security. I wonder who they were defending it from?”
Ferrigno added that the biggest perceived threat to Social Security has been the move to a chained consumer price index, which he believed would lower benefits over time by reducing the cost of living adjustments beneficiaries receive each year.
Along with AARP’s Romasco, others to testify at the hearing were Andrew Biggs, a resident scholar at American Enterprise Institute; Dean Baker, co-director for the Center for Economic and Policy Research; and John Sweeney, executive vice president of Fidelity Investments in Boston, Mass.
Most did defend Social Security, although it was suggested that benefits be reduced for higher earners and increased for low- and middle-income households.