Photo: Washington Times
For the last two months, France strikes have stemmed from high levels of civil unrest and public demonstrations against a proposed law by the nation’s government to raise the retirement age from 65 to 67, and early retirement from 60 to 62.
Sound familiar? It should since Social Security retirement age in the U.S. could also be raised, but from 67 to 70. Would Americans exhibit the same level of public outcry?
French President, Nicolas Sarkozy, has repeatedly stated the government will not back down from rioters, but has urged the Senate to speed up the voting process on his proposal for national pension plans. The situation may come to a boiling point soon as the Senate is expected to come to a decision.
Strikes and violent outbursts have erupted in major metropolitan areas around France, including in cities like Paris, Marseille, Bordeaux and Toulouse. The nation is on the verge of coming to a complete standstill as its oil reserves are running short, gas stations are going dry, roads are being blocked and transportation stations are getting shut down.
Global Economic Impact
While union leaders and students are at the forefront of these French strikes, local newspapers report that 70 percent of the public are backing the protesters, according to The Daily Mail. The government has ordered oil refineries to get back to work as the shortage of gas is crippling the nation’s productivity. Major airports are halting and canceling domestic and international flights because they don’t have enough fuel. Some flights are forced to takeoff without sufficient fuel.
While the situation seems drastic, it really may only be a temporary blip on France’s economy. According to Bloomberg, the nation’s GDP only dipped 0.2 percent in 1995 when a similar strike occurred. However, the French Chemical Industry Union said in a statement it is losing $140 million a day because of the strikes and Air France has lost about $35 million.
Sarkozy has stated that the reason for the pension reform, however, is to get France’s pension budget and overall deficit under control by 2018, but increasing the age limit for pensions could affect retirement planning for millions.
Are U.S. Retirees Also at Risk?
While it’s highly doubtful that the French strikes will have much of an impact for Americans–outside of tourists and Lady Gaga, of course–talks of raising retirement ages at home have also been brought up. The Social Security system in the U.S. is going in the red six years ahead of schedule and with the government already running high deficit spending to get the economy on track, many retirees and pension plans are at risk.
The republican proposal to raise retirement age for eligibility of Social Security is a hot topic among U.S. citizens, too. Recently, House minority leader, John Boehner (R-OH), proposed raising the age minimum for full benefits from 67 to 70.
Ranking republican on the House Budget Committee Paul Ryan (R-WI) has proposed to privatize Social Security, as well as raise age limits with life expectancy and slowing payout growth by changing the way they are indexed with inflation.
Could Strikes Happen in the U.S.?
Currently, there are about 58 million Americans that collect Social Security benefits, totaling about $700 billion in payouts. The system, however, does have a surplus balance of $2.5 trillion and the 2010 deficit is only projected at about $30 billion. So while a deficit is occurring, the situation isn’t as dire as it seems. At this rate, benefits should remain unaffected until 2037, according to SSA.
With 401(k) and other retirement funds already hurting from the recent financial disaster, detractors claim that retirees are as vulnerable as ever and future retirees will suffer the same susceptibility to market swings and downturns.
The question is, though, if Social Security reform gains more momentum in the U.S., would Americans show the same outrage that the French are exhibiting?
