Thursday, February 03, 2005

It's a bad deal

I have to link a rather good overall story at CNN.com on the proposal for Social Security offered by Bush. It points out

Without changes, the trust fund is projected to last until 2042, according to Social Security's actuaries. The CBO puts that date at 2052. After the trust fund is empty, payroll tax revenue would cover 73 percent to 81 percent of benefits under the current method of increases, according to estimates from both Social Security and the CBO. The CBO noted that because of those expected benefit increases, the benefits would still be higher in current dollars than what today's retirees are getting.
I wish they would have also noted the chart Kevin Drum has at Political Animal which predicts that Plan 2 brings in $9,000 less than promised benefits before 2052, and $3,600 less after Bush says Social Security goes "bankrupt". That's some bankruptcy, because it is still more money than you are likely to get from stock investment and price-indexing. This new plan is even more complicated and requires cutting benefits by what you earn in your account, plus interest, plus more cuts to cover the original shortfall. It cannot be stated enough, this is a bad plan with problems for everybody.

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