Sen. Marco Rubio, R-Fla., grabbed the third rail of American politics Tuesday, outlining proposals to reform Social Security and Medicare and facilitate increased retirement savings in a speech at the National Press Club.
Rubio called for raising the retirement age for people under the age of 55, reducing the rate of growth in Social Security payments to wealthy retirees, moving to a premium support plan for Medicare such as the plan developed by Rep. Paul Ryan, R-Wis., and allowing people in to save money through the savings plan offered to members of Congress.
"Each of the three legs of our traditional retirement stool — personal savings, pensions and Social Security — is wobbling," Rubio said in his prepared remarks. "And if we do nothing, each of the three will likely cease to exist as we know them well before my generation enters retirement."
He offered ideas to address each of the three legs, starting with suggesting that Americans who don't have access to employer-sponsored savings plans be allowed access to the Thrift Savings Plan offered to members of Congress and federal workers.
"It is one of the most efficient savings plans in America. It charges fees which are a fraction of those in most private defined-contribution plans, allowing beneficiaries to save more," he said. "Opening Congress’ retirement plan to the American people will allow us to bring the prospect of a secure, comfortable and independent retirement into reach of millions of people."
To the same end, he called for eliminating the 12.4 percent payroll tax levied on income earned by people who have reached retirement age.
"These seniors have already paid their fair share, and we shouldn’t punish them for choosing to keep working rather than immediately cashing in," Rubio said in the prepared speech.
That's not the only thing he'd eliminate. "Those who choose to claim their benefits early while they keep working are subject to what’s called the Retirement Earnings Test," Rubio said. "Under this test, benefits are reduced approximately 50 cents for every dollar a person between the ages of 62 to 65 earns in excess of $15,000 a year.This essentially equates to a 50 percent tax on benefits on top of all other taxes being paid, such as the payroll tax I just discussed. The result is that Americans often work right up until the age of 62, and then enter retirement before they start incurring this penalty."
Rubio also proposed Medicare reforms, which he said "was a third rail" of politics but now faces "impending doom" if left unchanged.
"So when it comes to a broad and comprehensive Medicare reform plan, let's learn from the mistakes of Obamacare and the successes of programs such as Medicare Advantage and Medicare Part D," he said. "Let's dramatically expand health care choices for seniors, spur competition in the marketplace and extend the solvency of the Medicare trust fund -- all while making sure traditional Medicare remains an option."
Specifically, he praised Ryan's proposals. "I supported a couple key proposals to fix the program that were detailed in his Roadmap during my campaign in 2010," Rubio recalled in the prepared text. "Since then, he has teamed up with Sen. [Ron] Wyden to propose a bold bipartisan plan to institute the premium support model. Under this plan, the government contribution would be fastened to either traditional Medicare or the average bid -- whichever is cheapest. This way, if seniors choose plans that cost more than that benchmark, they would have to pay the difference. If they choose cheaper plans, they would get to keep the savings. By driving competition between private plans and traditional fee-for-service Medicare, we could spur choice while controlling costs. It would also lead to innovations that are specifically focused around the needs of beneficiaries."
Rubio preempted demagoguing the proposals repeatedly by referring to his own parents. "I have no doubt that my suggestions today will be used against me, to try and convince seniors that I would change the benefits they worked so hard for and paid into all those years," he said. "It wouldn’t be the first time I’ve had such attacks hurled in my direction. So let me address that here and now. First, my mother depends on Medicare and Social Security. I will never support anything that would hurt my mother or retirees like her. And second, anyone who is in favor of doing nothing about Social Security and Medicare is in favor of bankrupting Social Security and Medicare."
The proposals also buttress the positive case for his candidacy that Rubio would make throughout a presidential bid, per the Washington Examiner's David Drucker.
"[Rubio] has quietly focused on building a political organization that would serve as the basis for a presidential campaign, burnishing his policy and legislative resume, and honing the Image of the sort of consensus Republican who historically has captured the GOP nomination," Drucker observed.
“We have gone to great lengths over the past couple of years to avoid at all costs becoming the flavor of the month,” senior Rubio adviser Todd Harris told Drucker. “We thought that it was important to take the long view.”
Whether running for the Senate or president, Rubio is going to have to sell these ideas to the "time-honored" Florida electorate, as he referred to them, that has often opposed reforms to Medicare and Social Security. If he can pull that off, he might have an electoral mandate that results in the passage of an actual law.