March 24, 2005
Social Security as welfare
Skip the discussion over privatization for a second. The other idea that White House is promoting is cutting benefits more for middle income retirees than for low-income workers, turning social security more into a welfare system for the elderly than a broad-based retirement program:
Mr. Hubbard also stressed the favorable view the White House takes of an idea called "progressive indexation" developed by Robert Pozen, an investment executive who served on Mr. Bush's advisory commission on Social Security in 2001. Mr. Pozen's proposal would give lower-income retirees an advantage in computing benefits over retirees who were better off.In fact, Pozen's proposal is discussed on the official Social Security web site. (Notably, for the last two years, the SSA cites analyses only of GOP proposals, more evidence of the partisan use of government web sites.)
Last week, Mr. Bush called this "a really interesting idea." Mr. Hubbard said, "The president finds the Pozen approach very attractive."
But here's a kicker. Pozen proposes cutting benefits for some retirees starting in 2012. This is the idea to apply inflation-indexing only for higher-income retirees, allowing their social security benefits to decline relative to wages over time to the point that social security would be only a token part of their retirement package.
Which is the goal. Once social security is significant only for low-income workers, it will be a lot easier propose cutting it even more. Look at Medicaid spending this year. Bush proposed signficiant cuts in Medicaid, since it is perceived as "welfare" for the poor, but didn't propose any signficant reductions in Medicare because it has broad-based support.
Posted by Nathan at March 24, 2005 07:04 AM