Saturday, April 30, 2005

Outlining Social Security reform

Social Security is in a financial nightmare. Before 2050, the system will be brokes and laying out more money then it is taking in. PresidentBush has made some proposals to fix SS. One of those was allowing younger workes to set aside a small portion of their contributions into private accounts. To hear the dems/leftists tell it, you would think that the Presidnt wants to privatize the enitre system. The President has made some other proposals as well. The Washington Times commnets in their editorial.

To attain that major achievement, the president embraced the proposal of "progressive price indexing," which has been put forth by Robert Pozen, who served in 2001 as a Democratic member on the President's Commission to Strengthen Social Security. Under current law, the "wage-indexation" formula for determining first-year Social Security benefits is based on trend changes in wages, which historically have risen faster than prices. Thus, based on current law and projected rising inflation-adjusted wages, the Congressional Budget Office has estimated that the scheduled initial annual benefit for the median-wage earner born in 1990 will be $23,300 (expressed in 2004 dollars). That is 56 percent higher than the scheduled initial benefit ($14,900) of the median-wage earner born in 1940 and retiring this year. The president's solvency plan would replace the wage-indexation formula with progressive price indexing.

Progressive price indexing would effectively guarantee that the Social Security benefits of the lowest 30 percent of wage-earners would continue to increase in accordance with the rising trend of inflation-adjusted wages. For the vast majority of the remaining 70 percent of workers in the middle- and upper-income categories, according to a sliding scale that incorporates both price changes and rising wages, initial inflation-adjusted Social Security benefits would continue to increase, but not as fast as real wages.
This will have the net effect of helping to keep SS more solvent, while helping lower income wage earners. As for private accounts, what is being proposed is allowing workers born after 1950, the ability to put 4% of their contributions into these private accounts.
Given Social Security's huge and ever-rising unfunded liabilities, the president has exerted solid leadership as the Senate Finance Committee begins writing reform legislation. Mr. Bush has offered a sensible proposal that addresses about 70 percent of the 75-year solvency problem, and he continues to invite Democrats to the table, where he welcomes discussion and negotiation of all options, except raising the payroll-tax rate. Solving nearly three-fourths of Social Security's long-term financing problems, while still allowing real initial benefit levels to continue to rise for the overwhelming majority of workers, represents a major, positive step forward.

Democrats who reflexively reject the progressive price-indexing option reveal themselves to be more interested in demagoguing Social Security than in rescuing it.
Would some one like to explain the dem/leftists plan to make SS solvent? What plan some may ask. I am asking that very same question. Where is the dem plan? Trashing Bush's proposals is not a plan, it is merely politics as usual for the dem/leftists. - Sailor

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