Debt Ceiling: How a Default Would Hit Seniors

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Oct. 10 (Bloomberg) –- AARP President Robert Romasco discusses how a U.S. default would affect Social Security recipients. He speaks with Erik Schatzker and Stephanie Ruhle on Bloomberg Television's "Market Makers." (Source: Bloomberg)

Citizens if the u.s. did default?

It puts every single obligation we have from bonds to social security payments to contractors at risk.

You have to make a decision and someone is not going to get paid.

It could be social security recipients, it could be bondholders.

Nobody knows.

When i think about the strong lobby, you represent 30 7 million senior citizens.

We seen the poverty rate for seniors continue to go down.

Children living below the poverty line is up to 23%. is that fair?

Who is the lobby for my kids?

We represent seniors and their families.

6 million of our members are providing full-time parenting for 6 million kids.

You think about them as far as the family network.

We have rogue rams ourselves and we have volunteers and schools for mentoring.

There's a lot more here.

The issue of intergenerational warfare is not right.

Right now, we have congressional warfare.

There is lots of talk and you heard it all.

You introduced -- you could forgo payments in social security and medicare to make hood on obligations to bondholders.

What's more important?

If you can't trust the american government to pay you back, surely that's the worst-case scenario, is it not?

We sent a letter to congress to basically say open the government and pay our bills.

We would all like that to happen?

Whether we get to october 17 or november 21, some he has to start making choices.

Would you advocate we would make those bond payments to preserve the country's credit worthiness even if it means for a short- term not making good on payments to seniors in the form of social security and medicare?

I believe there is some common sense running around here.

A catastrophe if we did not deal with the debt limit would be long-lasting.

Whatever choice we make, something is going to be very bad.

I share your optimism but i want to hold your feet to the fire.

In that circumstance, would you favor prioritization?

I think that is a bad idea.

Should there be privatization among social security recipients?

What about the seniors receiving social security when nih got cut and stocks got frozen?

Let's talk about that.

Shouldn't even be part of the discussion.

We're looking at social security to solve the wrong problem.

Social security is the only public program that has its own funding source.

We have to take it off the table.

Even if we should save money?

We are $6 trillion retirement prices.

Social security, how we save -- i know what larry fink has to say.

Because we are living longer, we should do things like raise the retirement or eligible the age.

The same goes for medicare.

Would you support that?

Social security is a separate conversation.

Raising the retirement age raises a lot of issues.

We've already done that.

We have the highest in the developed world.

We have already let on that.

But we are also spending the most money in the developed world.

Only on medical costs, not retirement.

That those medical costs are going up as people live longer.

We should look at medicare within the context of rising health care costs.

It is the number one driver of the federal budget.

It is not health care costs.

The average senior will get over $300,000 in benefits, more than he or she paid in taxes.

Is that fair?

Larry did not extend the analysis the whole way.

If you look at the 50 plus economy, it represents $173 billion in taxes.

Not only have people paid in their entire life, they paid money when they started getting benefits.

Larry is a smart guy and the analysis is incomplete.

The analysis of inner general -- intergenerational fairness has to go in here.

Let's look at a conversation about work, age come of the three-legged stool that doesn't exist anymore.

Lex what do you mean?

When we started social security, it was mostly social security is foundational.

Pension and savings.

I was in a room the other day with 200 people -- veterans and senior citizens.

They all had pensions.

How many of their children had pensions?

Three.

If we think about social security, it's even more important.

There is a reason that we can't afford all.

I look at the budget deficit and it tells me we can't afford it.

Somebody has to make some tough choices.

What are we going to cut in order to continue paying for the entitlement programs that we have?

Sequestration is an attempt that is pretty freaking painful if you ask some folks in government.

It has a problem 20 years from now and we ought to have the conversation right now.

We have been at this for a year.

To get our members to learn -- to look at understand the conversation.

When this comes to fruition, education budgets keep eating cut and our children are our future.

I couldn't agree with you more.

The issue is what kind of choices are we going to make question mark social security is a retirement challenge coming at us and we need to prepare for it.

The budget issue, we can talk about medicare, which is a more immediate problem, and there are solutions there that will save money.

You know why the markets are rallying today.

Because of the prospect of the six week extension of the debt ceiling and the important -- the hope there will be conversations on entitlement reform.

I'm speaking for investors here.

So in our effort to do foothold into the fire in such a conversation about entitlement reform, would you be prepared to give ground on any one of four issues?

Number one, chain cbi.

Number two, means testing, raising the retirement age for social security or private options to medicare -- private options to medicare.

Chain cbi we have been very cleared.

That's a bad policy.

Affects the most vulnerable edited benefit cut.

It doesn't not only cut benefits today for retirees, and cut some for veterans, disabled, every federal program it cuts.

It affects the most vulnerable.

It gets larger and larger.

What about means testing?

Progressivity is already in the program.

People at the top and could get less.

That is something we ought to look at.

It's already down to 85,000. we should look at it and make what decision?

Should wealthy people be receiving social security when we have more and more young people living below the poverty line?

It is a social insurance program.

That means everybody is in.

There is a healthy debate about universality.

Would you put that on the table?

I think that they had idea.

Why?

Because we want everybody in.

That means that wealthy folks -- we have experienced this firsthand and you know this -- people with more than enough in terms of wealth and assets, prospects, etc.

Sit here and say i don't know why i'm getting social security checks.

I don't need them.

I don't want them.

He gives away his social security check because he feels awful knowing people need money.

He's a generous man and a lot of places.

If you do that, you basically start to take universality, we are all in this together, and create a program for them.

Once you create a program, it is divisive.

People at the top get far less of their income.

It's progressive am a lower income folks get much more on the ratio.

You can look at the bend points and think about that.

That is what has made it universal of a supported and it has lifted people out of poverty.

These are critical issues.

This text has been automatically generated. It may not be 100% accurate.

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