Julie with a B

Wednesday, May 04, 2005
Social Security... once again with feeling.
First it was private accounts - but the reality, there, was increased costs and higher insolvency within the program.
Next it was . . . . what were the next three or four renditions of "the plan"? Hard to remember because as the Prez talked about them they changed.

Now it's a sliding scale idea - but it's really the shaft the middle class idea. The rich will be fine and the poor will get welfare. Yet, like every other welfare program, as soon as it is instituted, the conservatives will be "weaning the poor off of this give away program". So what this new version of "the plan" means is that social security will become defunct.

We still need that safety net for those who become disabled, for those who lose parents at a young age, and for those who outgrow their ability to earn. Social Security is not a "retirement plan". It is a safety net for those least able to help themselves. And it should be available to those from ALL walks of life.

Today's NYTimes: "But he did not directly discuss the primary implication of his approach: a reduction in benefits from the level promised to future retirees by the current system for all but people in the lowest 30 percent of the income spectrum."

. . . ."Under current law, initial benefits for retirees are set by a formula based on the growth in wages throughout the economy. Mr. Bush's plan would leave that formula intact for low-income workers. But for upper-income workers, the formula would shift to one based on prices, which tend to grow more slowly than wages. For middle-income workers, the formula would blend inflation and wage growth in setting benefits.

Over the long run, the effects, in terms of savings to the retirement system and reduced income to many retirees, would be substantial. For average-wage earners - making around $36,500 this year - the benefit cut would be 16 percent if they reach retirement age in 2045 and 28 percent if they retire in 2075, under the approach favored by Mr. Bush. For upper-income people - making $90,000 or above this year - the benefit cut for those retiring in 2045 would be 29 percent, and for those retiring in 2075 it would be 49 percent. Low-income workers would get the entire benefit now promised to them when they retire."

There is NO PLAN. And that's the problem. This isn't something that should be hacked out in a partisan style bargaining. The plan needs to be discussed and worked out with bi-partisan support in a way that helps everyone who needs the the safety net. Clearly changes need to be made and should be made now while the Baby Boomers are still paying into the system at fairly high wages. Perhaps a compromise: with slightly lower benefits, raising the wage cap some, and raising the percentage paid in. The Boomers need to ante up in order to keep the game going.


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