 |
 |
"The Deal?" No Deal.
August 29th 10:54:34 AM
An editorial in the Dallas morning news yesterday called for President Bush to back Senator Robert Bennett's (R-UT) plan to reform Social Security by changing the formula by which benefits are calculated. They call it "The Deal," in that it would force Democrats to come to the table and back a reform - which they have refused to do, thus far - and give Republicans a way out of a sticky situation before the midterm elections.
The problem is that under Senator Bennett's plan, everyone misses out: the opportunity to create wealth, to pass on an inheritance to one's children, and upward mobility for America's low-income workers are forgone.
Senator Bennett's plan, indeed, would address the pressing solvency issue. It is important that Social Security promises to pay out only the benefits it can afford; calculating benefits by price-indexing as opposed to wage-indexing will help to accomplish that goal. However, changing the manner by which Social Security benefits are calculated fails to address the structural problems the program faces.
Personal Retirement Accounts offer an alternative to the pay-as-you-go system, forcing the Social Security system to save for the future. Though it is certainly prudent to address the solvency problem, it is just as important to examine how the current system functions, and to provide a program that provides more advantages than just an income stream.
Social Security needs serious help, but Americans simply cannot afford to pass on the opportunity to create wealth.
Posted by Erin Robert
Comments
Bennett's legislation uses a combination of "Progressive Indexing" (proposed by Robert Pozen and supported by Bush) and "longevity indexing" to solve 90% of the 75-year Social Security shortfall.
BUT, he is also proposing legislation which will created "Carve-in" Personal Accounts, while simultaniously creating 401(k) reform (changing it from opt-in to opt-out).
President Bush SUPPORTS the first bill (Solvency legislation) because unlike the Democrats, he refuses to hold the entire trust fund hostage over disagreement over private accounts.
It is worth mentioning that enacting Bennett's solvency legislation also significantly strengthens the GROW and Stop The Raid legislation which invests the surplus in personal accounts (and is pretty popular according to polls).
Posted by Marc Goldwein on August 29th 06:49:33 PM
Bennett's bill is ok, it can be a component of final legislation. It cannot, however, be everything.
If we can only achieve a component of reform this year, I'm much more inclined to go with GROW accounts.
Posted by Adam Cahn on August 29th 08:57:02 PM
If this plan is going to do nothing more than shift from wage to price indexing, it is doing nothing more than making Social Security an even worse deal than it already is.
The Pozen plan is good because it shifts indexing, but moreso for the upper class, less for the middle class, and not at all for the lower class. It makes up for any possible lost money by giving people the option to have personal accounts; under most estimates, everyone stands to gain under the Pozen plan- they'd make more money, they'd have personal accounts, and 70% of the funding gap would be solved.
This plan, on the other hand, essentially slashes everyone's benefits across the board, with no PRAs. That's a shoddy deal, given that we all pay 12.4% of taxes into this system. We deserve a net gain, and the current system won't give that to us. Nor will Bennett's plan. Pozen's plan is a good compromise that takes into account a fair indexing change AND gives people the choice to have a personal account; too bad Democrats have stonewalled a perfectly reasonable reform.
Posted by Sunny Sidhu on August 29th 10:35:14 PM
|
|
|
|
|
