President Obama plans to strike a new Social Security and Medicare "bargain" with the American people, he told the Washington Post last week. "What we have done is kicked this can down the road. We are now at the end of the road and are not in a position to kick it any further," he said about the government’s management of costly entitlement programs. "We have to signal seriousness in this by making sure some of the hard decisions are made under my watch, not someone else's."
Here are Obama’s retirement proposals.
Income tax. The Obama administration would like to eliminate income taxes for seniors making less than $50,000 annually. The White House estimates this will provide a tax cut averaging $1,400 to 7 million seniors.
Automatic workplace pensions. Obama plans to automatically enroll employees in workplace pension plans. Employers who do not currently offer a retirement plan will be required to enroll their employees in a direct-deposit IRA account. Workers may opt-out if they choose. The White House says this program will increase the savings participation rate for low and middle-income workers from 15 percent to approximately 80 percent. Families that earn less than $75,000 would get a 50 percent match on the first $1,000 automatically deposited into their account.
Company pensions. Many companies are slashing retirement benefits as their bottom lines suffer. Obama plans to prohibit firms from issuing executive bonuses while cutting worker pensions, increase the amount of unpaid wages and benefits workers can claim in court, and limit the circumstances under which retiree benefits can be reduced. Employees would also receive annual disclosures about their pension fund's investments.
Social Security. Obama is considering plans to raise Social Security payroll taxes for those making over $250,000 a year by two to four percent (combined employer and employee). The administration does not currently have plans to privatize Social Security or raise the retirement age.
Medicare. The new President supports allowing the federal government to negotiate lower drug prices for Medicare recipients, importing prescription drugs from overseas, helping cheap and safe generic drugs get to market faster, and closing the doughnut hole gap in Medicare Part D prescription drug coverage.
Tell us, what do you think of these proposed policies?