Friday, February 10, 2006

In his State of the Union address, Bush punted on entitlement reform, with talk of a bipartisan commission. Or so I thought. Allan Sloan points out in the Washington Post that Bush's budget contains a Social Security reform proposal.

I don't know how hard the White House will push for it, but I'm heartened to see the concrete proposal of at least some benefits cuts via progressive indexing. Will Wilkinson makes some good points about this. Excerpt:
As far as I can tell, there is little to no evidence that converting social security to a means-tested benefits program would reduce political support for it. It is true that former Social Security administrator Wilbur Cohen’s assertion that a program for the poor will be a poor program is repeated endlessly. But truth is not established by repetition. Unemployment and disability insurance, unlike Social Security retirement benefits, kick in only in conditions of necessity. Nevertheless, or perhaps due to that fact, they are very politically popular, well-funded, and face no apparent political threat of reduction.

Indeed, there is compelling evidence that means-tested retirement benefits would be too generous creating a perverse incentive for workers to save too little in order to qualify for a beefy means-tested benefit.
Bush's budget also proposes private Social Security accounts. Are they worth the cost?
On page 321 of the budget proposal, you see the privatization costs: $24.182 billion in fiscal 2010, $57.429 billion in fiscal 2011 and another $630.533 billion for the five years after that, for a seven-year total of $712.144 billion.
The net costs could be zero or better depending on the offseting benefit cuts. But the details are unclear, at least to Allan Sloan:
It's not clear how big a reduction in the basic benefit Social Security recipients would have to take in return for being able to set up these accounts, or precisely how the accounts would work.
Also see Andrew Samwick's commentary.

At any rate, even if Bush wasn't really punting on Social Security reform, he has still inspired me to raise the bar for my own punting. I'm announcing the formation of a bipartisan commission to consider the mixed blessing of my growing Dr. Pepper can collection. The empty cans are glorious in their multitude, but space really is running out. Applicants: this is serious commission intended to address a serious issue, so blue ribbons are a plus (insert Pabst pun here).

1 Comments:

Blogger Mike said...

You should hang the cans up across the ceiling using string or wire

2/12/2006 1:27 PM  

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