Wednesday, March 09, 2005

The Right Questions on Social Security (washingtonpost.com)

"Pozen is a registered Democrat....doesn't see personal Social Security accounts as an end in themselves -- "I'm not a big believer in the ownership society," he says...."

The columnist is a likely Democrat as inferred from this statement, "Most of all, he approaches the Social Security debate asking the right questions: What can be done to put the system on a more solvent footing, and how can that be accomplished in a way that reflects the differing roles that Social Security plays among different income groups? Specifically, the one-fifth of Americans for whom Social Security is the sole source of income ought to be treated differently from those for whom Social Security benefits are merely the icing on a retirement cake composed mostly of savings and pensions."

(The implications being the Bush Administration is asking the wrong questions, and retirees whose cake whole is full of income derived from personall savings and genourous corporate savings!)

She goes on "It's tempting to describe the Pozen approach as Bush Lite...Perhaps a better phrase would be Bush Smart: Pozen's plan is less radical and more compassionate than the president's. It would let workers put 2 percentage points of the money they pay toward Social Security into private accounts.."

Are the Left so blinded by hate that they don't believe President Bush asked for 4% with the idea of compromising for something less? (Truly, the Left does not consist of the smarter half of the country.)

"(1)His argument against the alternative -- having the government take advantage of the equity premium by investing in the market itself -- does not show the usual mystical attachment to personal ownership or abhorrence of government influence over the markets. (2)Rather, he expresses the pragmatic fear that pressure to eschew certain politically incorrect stocks and invest in others would yield diminished returns."

Again, if the writer weren't so ideologically blind, she'd see that sentence (2) flows from sentence(1).

And Mr. Prozen suggest altering the wage index formula! A very good solution as this assumption has a large effect on projecting benefits into the future on the numerator side. (I was going to predict in this post that Bush would get this too, but I am too humbled by the difficulty in predicting the future.)

While the the calculations do not wipe-out the projected deficit, it does lessen it. As I accept the imperfection of projecting anything 75 years into the future, reducing the projected deficit by 50% allows more wiggle room for margin-of-error mistakes on the downside.

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