Kevin Drum starts us off with a handy uncomplicated chart, derived from analysis by the Center on Budget and Policy Priorities (CBPP). Drum explains:
Basically, low income earners ($16K/year) currently get about 49% of their income replaced by Social Security. Under the Pozen plan, [ed: the Pozen plan is the inspiration for Bush's new tact.] this would stay the same. Medium income workers ($36K/year), however, would see their replacement rate fall from 36% to 23% by the year 2100. The replacement rate for higher income workers ($58K/year) would fall to 14% and for maximum income workers ($90K/year) to 9%.That's plenty of cutting. And remember, we could do absolutely nothing and in 50 years--if the worst-case-projections of payroll tax revenue come true--everyone's benefits would be cut about 20 percent. (36 to 23 is a cut that's about double that).
Where do these goal numbers come from? The NYT says the goal is to shift the standard benefit increase from a wage-index to a price-index. But this would be a sliding scale, so the lower income you are (and that's measured at 16,000 a year), the closer your increase would be to the quicker-rising wage index. Upper income (and the top level is 90,000) would be increased with the price index.
Only people with the lowest wages would be distinctly better off under the president's plan than they would be if Social Security reserves were allowed to run out, as is projected happen in about 2040 or 2050. When there are no reserves left, enough money from Social Security taxes will be raised each year to pay about 70 percent to 80 percent of scheduled benefits.Think Progress points out that Bush's definitions have changed slightly:
Mr. Bush argues that people will still be much better off because the increased returns from the private retirement accounts he would create would more than offset the guaranteed benefit cuts.
to sell his tax cuts, Bush implied that anything under $100,000 was “low income.” Now, to sell his Social Security package, anything over $20,000 is “better off.”I'm all for providing greatest protection to the lowest income, and glad to see the President on board with that kind of thinking. I hope that any bill that happens to pass includes a progressive element. But doesn't this sound like the middle class really gets screwed here? And not for the sake of really uplifting the poor with real opportunity, but only for the sake of keeping the mostly impoverished from falling over the cliff into abject poverty once they reach retirement age?
[UPDATE-Saturday: Today's NYT puts a finer point on the reality of these proposed cuts and the President's reverse judo move that now has him self-appointed as champion of the poor, putting the Democrats in an awkward position, if they're smart enough to realize it.
President Bush has chosen to recast the 70-year-old retirement program as one that would keep the lowest-income workers out of poverty but become increasingly irrelevant to the middle class and the affluent.This is so misleading it would be funny if I wasn't worried it might actually work. It's one [good] thing to say "Benefits for low-income workers should grow faster than benefits for people who are well off." I happen to agree. It's quite another thing to accomplish that not by increasing the rate of growth for low income workers (as he deceptively implies), but by cutting them dramatically for everyone else (many of whom have a good claim on that "low-income worker" moniker themselves.) But Democrats would make a big mistake in being cavalier about this just because they're winning on saving SS (from the President) so far. This help-the-poor game strikes me as a stroke of Rovian evil genius.]
In his radio address on Saturday, Mr. Bush sought to cast himself in the Democrats' traditional role as a defender of the poor. "Benefits for low-income workers should grow faster than benefits for people who are well off," he said. "By providing more generous benefits for low-income retirees, we'll make good on this commitment: If you work hard and pay into Social Security your entire life, you will not retire into poverty."