US execs call for retirement age of 70

The Business Roundtable, which represents more than 200 chief executives from some of the largest U.S. corporations, also urged Congress to add a “premium support” mechanism to Medicare, peg Social Security cost-of-living adjustments to a lower inflation gauge and raise Medicare charges for wealthier beneficiaries.

This strategy for “modernizing and protecting our social safety net” would save US$300 billion in Medicare spending over the next 10 years, make Social Security solvent for 75 years and help foster stronger economic growth, the group estimated.

The proposals come as President Barack Obama and Congress prepare for an intensive new round of deficit-reduction talks. Safety net programs including Social Security and Medicare are likely to take center stage.

The CEOs intend to pitch their ideas to the White House and to congressional officials.

“We are calling on President Obama and Congress to look at our plan and enact a package of gradual changes that will provide economic and personal security for generations to come,” said Gary Loveman, CEO of casino and hotel company Caesars Entertainment Corp.

The former Harvard economist chairs the Business Roundtable's health and retirement committee.

Social Security and Medicare, once considered untouchable by U.S. politicians, are now at the foreground of deficit talks because of an aging population and rising healthcare costs that threaten to overwhelm the U.S. budget in years to come.

Proposals to raise the Medicare eligibility age to 67 from 65 and base Social Security payments on a slower growing “chained-CPI” are already part of the deficit discussion on Capitol Hill.

The group would push the age at which full Social Security benefits are paid to 70 for those now aged 54 and under. Currently, the age for collecting full benefits depends on year of birth, Someone born between 1946 and 1953 can take full benefits at age 66. That will rise to age 67 for individuals born in 1960 or after.

The group said sluggish economic and job growth, and bipartisan divisions in Washington, could make it easier for lawmakers to go farther in considering “politically risky” proposals such as Medicare premium support.

Those supports, which opinion polls have shown are broadly opposed by registered voters, would replace current Medicare benefits with a financial stipend for purchasing coverage from private insurers or the traditional program.

“There's nothing like impending pain to focus the mind, and the conditions the American economy faces are much more serious and sustained than any ... experience in my lifetime,” Loveman said.

But the group rejected shoring up Social Security by making incomes above the maximum annual threshold — which in 2012 was US$110,100 — subject to payroll taxes, saying that would hurt the economy.

“You would have to raise the base upon which the taxes are applied very substantially to drive a sufficient level of revenue to address the long-term solvency of the program,” Loveman said.

“That would be far more damaging to economic growth than what we're asking people to consider,” he added. “If you raise the tax rate on people who earn over the current threshold, you'll have an immediate deleterious effect on employment and economic activity.”

The Business Roundtable plan would also encourage private savings and include newly hired state and local government workers in the Social Security system.

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