Wednesday, January 05, 2005
Good Thing Five-Year-Olds Can't Vote
President Bush still won't say what he plans to do to reform Social Security. But there are indications he's now leaning toward some kind of cut in benefits. That could mean reducing benefits by as much as 9.9% for those of us who retire in 2022 all the way up to a 45.9% cut for kids today who'll retire in 2075. (USA Today)
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Indexing benefits to prices instead of wages makes sense. There is no reason why we should continue to bankrupt the system via an indexing mechanism that promises better benefits to people tomorrow than to the people getting it today - that is just as unfair. The approach is not sustainable. Those concerned about lowered future benefits because of it should consider not getting those benefits anyway because the system will not bring in as much as it would have to pay out.
That said, the private account part of the proposal needs tweaking. My big concern is that putting money into private accounts takes money out of the system. A better solution would be that a small portion of benefits be invested in the market following low risk strategies, independently controlled so the government cannot touch it or influence it. The money stays in the system, and grows at a better rate than it does today.
I strongly recommend people read Peter Peterson's, Running On Empty, in which he addresses the issues (as well as Medicare, budgets and deficits, and Left vs. Right political gridlock) and proposes sound solutions. There is no one fix necessary - it will take a combination of approaches - but we have a problem, people need to recognize that we do, and things have to change to fix it.
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