A group that represents 200 of the country's top chief executives unveiled a proposal Wednesday to raise the eligibility age for Social Security and Medicare recipients as a way to deal with the federal deficit.
The plan from the Business Roundtable, the elite of America's corporate leaders, also includes an expansion of public subsidies to senior citizens to purchase private health insurance, as well as a cut in Social Security cost-of-living adjustments.
Roundtable President John Engler said members of the organization, which includes the CEOs of Minnesota-based Target, Ameriprise Financial, Medtronic, UnitedHealth Group and General Mills, were in agreement with what could be very politically controversial initiatives.
Caesars Entertainment Corp. CEO Gary Loveman said the proposals would bring to heel two programs that threaten to swell the country's federal deficit to dangerous levels. "The view of my fellow CEOs was if we're going to fight this battle, recognizing that these battles are very difficult to fight, better to fight it for a meaningful change," Loveman said.
The detailed recommendations stand in contrast to the Roundtable's largely ineffective campaign to influence the recent fiscal cliff negotiations.
In that effort, the Roundtable's CEOs, whose companies employ millions and represent a third of the value of the U.S. stock market, signed a letter and paid for an ad campaign urging bold congressional action on the federal deficit. But the executives never said exactly what they thought Congress should do.
Their suggestions Wednesday did not lack for specifics. The Medicare plan would save $300 billion in the coming decade and $6 trillion over the next 25 years, the CEOs claimed. Social Security reforms would render the public retirement fund solvent for 75 years, they added.
Experts say raising the eligibility age for Social Security from 67 to 70 and the eligibility age for Medicare from 65 to 70, as the Business Roundtable suggests, will be a hard sell, even if they are phased in gradually and exempt anyone currently 55 or older.
"This is strange to me. It's a complete nonstarter," said Norman Ornstein, a congressional expert at the American Enterprise Institute. "Raising Medicare to 70 will be widely unacceptable to the public. And raising Social Security to 70 is just as untenable. It shows how insensitive business leaders are."
Minnesota executives either declined to comment or did not respond to requests for comment on the Social Security and Medicare plans.
AT&T CEO Randall Stephenson called the proposals "sensible."
"We believe very strongly that our modernization recommendations must be included in any budget deal that's agreed to by the president and Congress," Stephenson told reporters at a news conference. "There's a sense of urgency around this."
In addition to raising the eligibility age, the Business Roundtable believes the Social Security Administration should figure cost of living raises on a price system slightly more frugal than what it uses now.
Loveman said that move would cost an average retiree only about $40 a year. The Roundtable also endorsed means-testing for the rich seeking benefits, as well as making newly hired state and local workers pay into the Social Security system. Right now, those public employees do not participate.
On Medicare, the Roundtable endorsed increasing publicly paid premium supports for seniors to buy private health insurance instead of traditional Medicare if they choose. The plan resembles a version of Medicare reform pushed by Republican presidential candidate Mitt Romney in the 2012 election.
The Roundtable also wants the government to consider making upper-income beneficiaries pay more for Medicare services.
Significantly, the plan did not suggest making the wealthy pay Social Security taxes on all of their earned income. In 2013 American workers will not pay Social Security tax on wages above $113,700.
Loveman said making high-income earners pay more in Social Security would limit economic growth at a time when the country needs to break out of the lingering unemployment and low interest rates spawned by the Great Recession.
Loveman and Engler both said the details of the Social Security and Medicare plans were not a reaction to the inability of the business community to influence the fiscal cliff debate. That debate dragged on to the last minute and did not produce the comprehensive solution the Roundtable CEOs sought.
Engler said the new Social Security and Medicare reform plans are not intended to provide "leverage" in the upcoming House and Senate fight over raising the country's debt limit so the U.S. can continue to pay its bills.
President Obama has said he will not allow congressional Republicans to hold the debt ceiling increase hostage to budget cuts. Some Republicans promise to block any increase in debt without reduced spending measures.
The Roundtable supports raising the debt ceiling for an extended period of time to create stability in the financial markets, but Engler said the group was "not trying to tailor [the Medicare and Social Security plans] to one party or the other."
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