The Babe Theory Of Political Movements.
Mar. 21, 2005 11:50 AM
Iran's Sham Election In Houston.
June 20, 2005 5:36 AM
Yes, Kanye, Bush Does Care.
Oct. 31, 2005 12:41 AM
Health Care vs. Wealth Care.
Nov. 23, 2005 3:28 PM
Americans Voting With Their Feet.
Nov. 30, 2005 1:33 PM
Idea Majorities Matter.
May 12, 2006 6:15 PM
Twilight Zone Economics.
Oct. 17, 2006 12:30 AM
The "Shrinking" Middle Class.
Dec. 13, 2006 1:01 PM
From Ashes, GOP Opportunities.
Dec. 18, 2006 6:37 PM
Battle Between Entitlements & Pork.
Dec. 21, 2006 12:31 PM
Let Economic Freedom Reign.
Dec. 22, 2006 10:22 PM
Biggest Health Care Moment In Decades.
July 25, 2007 4:32 PM
Unions Antithetical to Liberty.
May 28, 2008 11:12 PM
Right To Work States Rock.
June 9, 2008 12:25 PM
Social Security Reform Thursday.
March 13, 2008
Caption Contest: Enter Today!
Due: July 29, 2008
The Carnival Of Classiness.
Mar. 14, 2006
Quotational Therapy: Obama.
Apr. 4, 2008
Mainstream Melee: Wolfowitz.
May 19, 2007
Pundit Roundtable: Leaks.
July 9, 2006
A WILLisms.com(ic), by Ken McCracken
July 14, 2006
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Reform Thursday: Week Fifteen.
Thursdays are good days for reform, because they fall between Wednesdays and Fridays.
That's why WILLisms.com will display a chart or graph, every Thursday, pertinent to Social Security reform. The graphics are mostly self-explanatory, but we include commentary on some of them where and when necessary.
This week, we examine Progressive Indexing in Social Security-
First, why pegging Social Security benefit growth to wages is causing such a headache:
Wages far outpace inflation. If, in the future, benefits grow based on inflation, you get the green bars. If they grow based on wage growth, you get the red bars. The problem is: THE SYSTEM CANNOT HANDLE THAT KIND OF GROWTH. Beginning just a dozen years from today, as the Baby Boom generation begins retiring in full force, Social Security will begin paying out more than it takes in.
There is a structural deficit in Social Security that needs to be addressed at its root.
Price indexing, according to many estimates, would wipe out nearly the entire unfunded liability of Social Security. But some believe it might leave the poorest of Americans behind.
In comes progressive indexing, which is somewhere in the middle, between wage and price indexing. Progressive indexing slows the rate of benefit growth for the highest income earners, while preserving benefit growth pegged to wages for lower income earners:
According to Steve Goss, Chief Actuary of the Social Security Administration, this progressive indexing formula would wipe out around 3/4 of Social Security's long-term deficit (.pdf). The remaining solvency problem could be solved in a number of other ways.
But won't this short-change people? Isn't this still a cut in benefits?
Not at all. People will have the choice of contributing some of their payroll taxes to personal savings accounts, much like the Thrift Savings Plan (TSP) profiled last week. Through these personal accounts, which individuals, not the government, own, people will have the opportunity to earn compound interest, more than making up for the shortfall.
The brilliance of personal accounts is that, on the individual level, a retiree will not notice a drop in benefits (in fact, he or she will almost certainly see larger benefits). In terms of getting a check in the mail (or a direct deposit), nothing changes.
But, meanwhile, from the government's perspective, the benefits paid out are reduced enormously.
It's a win-win. Gramps gets his check. The solvency crisis is averted. A major entitlement eats up less rather than more of the federal budget. More capital is put to use in the American free enterprise system. Everyone is happy.
The Joint Economic Committee of the United States Congress; Understanding Progressive Indexing (.pdf), April 27, 2005.
Posted by Will Franklin · 12 May 2005 10:09 AM
Everyone is happy? I'm betting there's some politicians in DC with D's by their names that won't be.
Their current position is "oppose because we can."
Posted by: Hoodlumman at May 12, 2005 10:37 AM
Not everyone is happy. I am so sick of those do nothing scum bags. I am sick of Joseph Biden and all the other worthless gang of theives!...Get something done you disgusting parasites!
Posted by: Zsa Zsa at May 12, 2005 10:53 AM
Posted by: Willbur at May 12, 2005 11:33 AM
Anything the liberals can do to prevent any type of progress towards Social Security while the GOP is in the majority will be sure to be squashed. The American people need to address this during the next election. I am certain young Americans for the most part don't want to save the social security system. Register to vote and let them know they can't keep their jobs and continue doing nothing for partisan sake. This is not a partisan issue. Grrrrrr...
Posted by: Willbur at May 12, 2005 11:52 AM
Reform you numb skulls!...
Posted by: Zsa Zsa at May 12, 2005 08:36 PM