We must look at retirement security broadly. Congress and the president must work together and focus on our larger national goals of economic growth, jobs, health and financial security and enacting affordable policies to meet those goals.
And let’s not kid ourselves, we can’t achieve these goals by simply cutting spending or just increasing revenue. We have to do both.
The social compact that requires that this generation leave the next generation a stronger rather than weaker economy also requires this generation to leave the next generation a more secure rather than a weaker retirement.
The Pew Research Center recently asked people what it takes to be part of the middle class. The answer? Five things:
- A secure job
- Health insurance
- Owning a home
- A college education or some form of higher education
- And stocks, bonds or other investments — in other words, to be able to save and invest for the future.
Let me talk about jobs for just a moment. Jobs are key to achieving the American Dream, putting ourselves, our families and our country back on the road to prosperity and keeping America competitive in the new global economy.
Without jobs, today’s workers have no chance for a middle-class retirement, and economic growth and prosperity for the middle class and others is not possible. As it is, more middle-class workers will need to work longer to maintain a decent standard of living in retirement.
Yet today, millions of experienced workers remain out of work in the wake of the Great Recession. During 2012, workers 55 and older were unemployed, on average, for more than a year.
We need to preserve middle-class jobs that offer opportunity for advancement. And, we need to improve the pay and quality of lower-skilled jobs that represent the fastest growing occupations in the decades ahead.
The second thing we have to do is tackle the high cost of health care — which is one of the most significant factors driving people out of the middle class. Rising costs have a negative impact on federal programs such as Medicare and Medicaid, as well as on the costs for state governments, employers and individuals.
The percentage of our nation’s GDP dedicated to health care has nearly doubled from 10 percent to almost 20 percent over the last generation, and is still rising. That’s more than any other developed nation — with no better outcomes.
We cannot sustain an ever-increasing share of the nation’s output going to health care, especially when the Institute of Medicine estimates that as much as one-third of health care spending is wasteful or inefficient.
The Affordable Care Act begins to set in motion what needs to be done to reduce health care costs, but we need to do more.
Policy makers must not simply reduce the federal share of health costs by shifting costs from the federal government to other payers. That will not solve the problem. In fact, it will make it worse because it fails to tackle the real underlying issue of reining in high growth in health costs throughout the system and the percentage of GDP that goes to health care.