Gov. Daniels Wants To Raise The Retirement Age Because Young People ‘Will Live To Be More Than 100′

In the wake of President Obama’s fiscal commission releasing a report that aimed to put Social Security into long-term balance by, among other things, raising the retirement age, a whole host of lawmakers have jumped onto that particular bandwagon. “If we do not do something to extend the retirement age…you’re not going to have this program,” said Rep. Eric Cantor (R-VA), while Sen. Kent Conrad called for implementing the fiscal commission’s Social Security plan in an op-ed today.

The latest to advocate such a change is Indiana Governor Mitch Daniels (R). During an interview with the New York Times’ David Leonhardt, Daniels claimed that raising the retirement age makes sense because people will eventually live to be 100 years old by “replacing body parts like we do tires”:

Clearly, means testing. Clearly, retirement age, over time. What you’re saying to these younger people is –- who, by the way, I think, barring disasters, are going to live to possibly old ages, as we have always thought of it…They will live to be more than 100, because, again, barring accidents or something, or war, well over. They should. They’ll be replacing body parts like we do tires. If you ask a young person who’s paying any attention to this, “How old do you expect to be, and how long would you like to be a vital working person?” they’re not going to find this offensive. Thirty years from now, you might work at 68, 70, 72….

Aside from the obvious folly of raising the retirement age now in anticipation of human body-part replacement technology that may or may not exist at some undetermined point in the future, Daniels is basing his policy preference on the same faulty understanding of American life expectancy espoused by loads of would-be Social Security reformers.

While average life expectancy has indeed been rising, it is largely as a result of increases among upper income earners working in white-collar jobs. Middle- and low-income workers have not seen the same increases and would be disproportionately affected if the retirement age were raised. As the Center for Economic and Policy Research put it, “there has been a sharp rise in inequality in life expectancy by income over the last three decades that mirrors the growth in inequality in income”:

If the normal retirement age is increased to age 70 over the next 25 years, as advocated by many policymakers, then the rise in the retirement age will continue to offset most of the increase in life expectancy. In the event that trends in inequality continue, then workers in the bottom half of the wage distribution will see a decline in the expected length of their retirement. For these workers, in the higher retirement age scenario, the expected years of retirement will be less for the 1973 birth cohort than it was for the 1912 birth cohort.

Daniels has a reputation as a reasonable conservative, and he is willing to at least inhabit reality when it comes to things like tax policy. But his version of Social Security reform entails a regressive change that hurts those most dependent on the program. Here’s a progressive vision for modernizing Social Security that does not rely on the blunt instrument of raising the retirement age.

Cross-posted on the Wonk Room.