The politically charged retirement issues of Social Security and Medicare got barely a mention last night, neither in the president’s State of the Union address nor in the Republican response.
President Barack Obama in his nationally televised speech to Congress mentioned the twin issues just once:
Here’s the full context of what the president said:
Do we want to keep these tax cuts for the wealthiest Americans? Or do we want to keep our investments in everything else –- like education and medical research; a strong military and care for our veterans? Because if we’re serious about paying down our debt, we can’t do both.
The American people know what the right choice is. So do I. As I told the Speaker this summer, I’m prepared to make more reforms that rein in the long-term costs of Medicare and Medicaid, and strengthen Social Security, so long as those programs remain a guarantee of security for seniors.
But in return, we need to change our tax code so that people like me, and an awful lot of members of Congress, pay our fair share of taxes.
The Republican response came from Indiana Gov. Mitch Daniels. He mentioned them twice:
There is a second item on our national must-do list: we must unite to save the safety net. Medicare and Social Security have served us well, and that must continue. But after half and three quarters of a century respectively, it’s not surprising that they need some repairs. We can preserve them unchanged and untouched for those now in or near retirement, but we must fashion a new, affordable safety net so future Americans are protected, too.
Decades ago, for instance, we could afford to send millionaires pension checks and pay medical bills for even the wealthiest among us. Now, we can’t, so the dollars we have should be devoted to those who need them most.
The mortal enemies of Social Security and Medicare are those who, in contempt of the plain arithmetic, continue to mislead Americans that we should change nothing. Listening to them much longer will mean that these proud programs implode, and take the American economy with them. It will mean that coming generations are denied the jobs they need in their youth and the protection they deserve in their later years.
So what are the two sides proposing?
Obama was as general last night as he has been all along. He hasn't proposed any changes in current or future benefits. Instead he wants Democrats and Republicans to figure out how to strengthen the program. He supported the $250 payment to Social Security recipients in the 2009 federal stimulus package and has called for a second $250 payment to beneficiaries.
The two leading Republican candidates to face Obama in the 2012 election want to leave the Social Security and Medicare entitlements alone for the Baby Boomers 55 and older who are becoming eligible for the benefits at a rapid rate.
Former Massachusetts Gov. Mitt Romney would, for the next generations of retirees, raise the retirement age for full benefits one or two years. The former Massachusetts governor also wants to reduce inflation increases in benefits for wealthier recipients.
Former House Speaker Newt Gingrich supports giving younger workers the option of diverting Social Security taxes to private retirement accounts. Employers would still pay their share to the federal government, which would protect private account holders in the event of a huge drop in stock markets.
But the president does want a change in the way investment income is taxed and that could very well have an effect on Baby Boomers drawing their retirement income from investments.
Romney’s recently released tax returns show that investment income is taxed at about 15 percent, while earned income is taxed at double that.
Obama wants income from investments taxed at the same rate as income earned from a job.
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