The challenges facing the next president will include the long-term solvency of Social Security and Medicare. These two programs are the most important linchpins in American retirement security - and they are among the biggest stress points for the federal budget. At the same time, big questions loom about the retirement security of America's growing older population.
Assuming the Wall Street crisis doesn't take up all of tonight's final presidential debate, here are some of the questions I hope moderator Bob Schieffer will ask the candidates.
To Sen. John McCain: Social Security is facing a solvency problem. The huge baby boomer generation is starting to retire and receive benefits, and most forecasts say Social Security's expenses will surpass incoming revenue starting in 2017, which would force the system to start relying on its trust fund. And that would only last until 2041.
You have responded by advocating Social Security privatization of the type proposed by President Bush in 2005. This would allow people to put some of their Social Security dollars into private savings accounts, where the funds could be invested in mutual funds or other investments. But doesn't the recent tumult in our markets and financial system serve as a reminder of the risks this would entail? And how would privatization address the Social Security's solvency problem?
To Sen. Barack Obama: Rather than privatize Social Security, you call for shoring up the system through increased payroll taxes over a period of years on high-income earners. You've also said you don't want to cut anyone's benefits. That sounds like a relatively painless solution to a problem that most experts say will require some pain in the form of higher taxes and benefit cuts.
Some Social Security experts propose a modest increase in the eligibility age for benefits. Americans are living longer, and most baby boomers say they intend to keep working beyond the traditional retirement age. Won't the ultimate solution to Social Security's problems require further tax increases and some reasonable reduction in benefits?
Senator McCain: You've been quoted saying that "everything has to be on the table" on Social Security - but you've also been quoted saying you wouldn't raise taxes. Would you support tax increases to get Social Security on the path to solvency?
Senator Obama: Projections show that the Medicare hospital insurance trust fund will be exhausted in 2019 if trends continue. But fixing Medicare is even more complicated than bolstering Social Security, because government will need to find a way to slow spending on health care. You've proposed allowing Medicare to negotiate drug prices, much as the Department of Veterans Affairs does. How much saving do you expect to achieve through drug negotiation, and will it be enough to fix Medicare?
Senator McCain: Your solution to Medicare's problems focuses on changing the way medical professionals are paid from a fee-for-service to a fee-for-outcome system. You've also said you'd impose higher fees on wealthier people. Who exactly would pay these higher fees? Some experts have suggested that you'd also have to make changes affecting Medicare recipients with incomes of $50,000 or less to achieve any substantial savings. How much do you expect the Medicare program would save by implementing these changes? Would it be enough to fix Medicare?
Senator Obama: Participation in 401(k) retirement savings plans is much lower among lower-income workers than in higher-income groups. You've proposed automatic retirement saving plans that include a mandate for employers who don't offer retirement plans to employees. They would have to automatically enroll employees in a direct-deposit IRA account - although employees could opt out if they choose. Wouldn't this put some heavy burdens on employers, especially small businesses?
Mark Miller blogs at www.retirementrevised.com. His e-mail is email@example.com.