Saturday, April 30, 2005
A Social Security Robin Hood ?
At his press conference, President Bush re-emphasized the importance of Social Security reform with Personal Accounts and introduced the notion of "progressive indexing" of future benefits. Of course, Big Media and the Democrats have been complaining loudly ever since. They are particularly upset by the "progressive indexing" scheme which, interestingly, is based on a proposal by a Democrat member of the President's Social Security Review Board.
A somewhat different view is taken by this The New York Times Op-Ed Columnist who sees Bush as a modern Robin Hood. He begins his article by saying that:
"Democrats have good reason to be aghast at President Bush's new proposal for Social Security. Someone has finally called their bluff.
They tried yesterday to portray him as just another cruel, rich Republican for suggesting any cuts in future benefits, but that's not what the prime-time audience saw on Thursday night. By proposing to shore up the system while protecting low-income workers, Mr. Bush raised a supremely awkward question for Democrats: which party really cares about the poor?"
And ends the article by saying:
"It was the kind of talk you might expect to hear from a Democrat, except that Democrats don't talk about much these days except the glories of the New Deal. They know that Social Security doesn't even have the money to sustain a program that leaves millions of elderly people in poverty. But it's their system, and they're sticking to it."
Along the way he mentions :
" "The amount of income-related redistribution in Social Security is a lot less than people think," said Jeffrey Liebman, a Harvard economist and a former official in the Clinton administration. "If you get the details right, you can design a personal-account retirement system in which groups with high risks of poverty in old age come out at least as well as with the current system." "
And : " The libertarians at the Cato Institute are trying to strengthen it with a proposal that has been introduced by Republicans in Congress. If your individual account left you with a paltry pension, their plan would guarantee you a subsidy to lift you above the poverty line - and well above what many retirees are now getting from Social Security."
That Cato Institute proposal ( the 6.2 Percent Solution) , along with several other reform plans, is discussed in this pdf document Briefing Paper 92 pdf ,which tells us that:
"The Social Security Administration's Office of the Actuary has officially "scored" the Individual Social Security Investment Program Act (HR 530), introduced by Reps. Sam Johnson (R-TX) and Jeff Flake (R-AZ). That legislation is based on the Cato Institute's 6.2 Percent Solution. ...
The SSA analysis shows that the 6.2 Percent Solution can provide large individual accounts while restoring Social Security to permanent sustainable solvency, and can do so in a fiscally responsible manner. "
There are several other plans which offer personal acccounts and have been scored well by the SSA Actuary. The Ryan-Sununu Plan has been introduced in both houses of Congress and gets full solvency and sustainability with Personal Accounts combined with a plan to restrain the growth of discretionary Federal spending based on cost of living increases for the next 8 years. This plan does not need "progressive indexing" of future benefits and, like the Cato plan, provides assurances that Account Owners will not fall behind a poverty or minimum benefit level.
But can we really expect to hold down the rate of spending growth ( mind you not actually cut back on spending , just on the rate of growth)? This article on Financing Social Secutiry reform with pork shows how easy it would be to get over $2Trillion for SS Reform transistion costs simply by reducing low priority, if not foolish, items. Maybe it's not a big problem, just a matter of priorities.
It will be interesting to see how this plays out now that Congress is actively working on creating legslation. If Congress takes the Ryan-Sununu approach, Bush won't end up as Robin Hood. But that would mean Congress would get serious about living within a real budget. Don't bet against Robin Hood yet.
A somewhat different view is taken by this The New York Times Op-Ed Columnist who sees Bush as a modern Robin Hood. He begins his article by saying that:
"Democrats have good reason to be aghast at President Bush's new proposal for Social Security. Someone has finally called their bluff.
They tried yesterday to portray him as just another cruel, rich Republican for suggesting any cuts in future benefits, but that's not what the prime-time audience saw on Thursday night. By proposing to shore up the system while protecting low-income workers, Mr. Bush raised a supremely awkward question for Democrats: which party really cares about the poor?"
And ends the article by saying:
"It was the kind of talk you might expect to hear from a Democrat, except that Democrats don't talk about much these days except the glories of the New Deal. They know that Social Security doesn't even have the money to sustain a program that leaves millions of elderly people in poverty. But it's their system, and they're sticking to it."
Along the way he mentions :
" "The amount of income-related redistribution in Social Security is a lot less than people think," said Jeffrey Liebman, a Harvard economist and a former official in the Clinton administration. "If you get the details right, you can design a personal-account retirement system in which groups with high risks of poverty in old age come out at least as well as with the current system." "
And : " The libertarians at the Cato Institute are trying to strengthen it with a proposal that has been introduced by Republicans in Congress. If your individual account left you with a paltry pension, their plan would guarantee you a subsidy to lift you above the poverty line - and well above what many retirees are now getting from Social Security."
That Cato Institute proposal ( the 6.2 Percent Solution) , along with several other reform plans, is discussed in this pdf document Briefing Paper 92 pdf ,which tells us that:
"The Social Security Administration's Office of the Actuary has officially "scored" the Individual Social Security Investment Program Act (HR 530), introduced by Reps. Sam Johnson (R-TX) and Jeff Flake (R-AZ). That legislation is based on the Cato Institute's 6.2 Percent Solution. ...
The SSA analysis shows that the 6.2 Percent Solution can provide large individual accounts while restoring Social Security to permanent sustainable solvency, and can do so in a fiscally responsible manner. "
There are several other plans which offer personal acccounts and have been scored well by the SSA Actuary. The Ryan-Sununu Plan has been introduced in both houses of Congress and gets full solvency and sustainability with Personal Accounts combined with a plan to restrain the growth of discretionary Federal spending based on cost of living increases for the next 8 years. This plan does not need "progressive indexing" of future benefits and, like the Cato plan, provides assurances that Account Owners will not fall behind a poverty or minimum benefit level.
But can we really expect to hold down the rate of spending growth ( mind you not actually cut back on spending , just on the rate of growth)? This article on Financing Social Secutiry reform with pork shows how easy it would be to get over $2Trillion for SS Reform transistion costs simply by reducing low priority, if not foolish, items. Maybe it's not a big problem, just a matter of priorities.
It will be interesting to see how this plays out now that Congress is actively working on creating legslation. If Congress takes the Ryan-Sununu approach, Bush won't end up as Robin Hood. But that would mean Congress would get serious about living within a real budget. Don't bet against Robin Hood yet.
