Bush puts incomplete Soc Sec private accounts plan into Budget

[papau]

http://www.msnbc.msn.com/id/11235990/site/newsweek/from/RSS

Sleight of Hand
Bush buried detailed Social Security privatization proposals in his budget. Can the surprise move jump-start bipartisan reform?

By Allan Sloan
Updated: 12:09 p.m. ET Feb. 8, 2006


Feb. 8, 2006 - <snip>Nevertheless, it's here. Unlike Bush's generalized privatization talk of last year, we're now talking detailed numbers. 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.

In the first year of private accounts, people would be allowed to divert up to 4 percent of their wages covered by Social Security into what Bush called "voluntary private accounts." The maximum contribution to such accounts would start at $1,100 annually and rise by $100 a year through 2016.

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.

Bush also wants to change the way Social Security benefits are calculated for most people by adopting so-called progressive indexing. Lower-income people would continue to have their Social Security benefits tied to wages, but the benefits paid to higher-paid people would be tied to inflation.

Wages have typically risen 1.1 percent a year more than inflation, so over time, that disparity would give lower-paid and higher-paid people essentially the same benefit. However, higher-paid workers would be paying substantially more into the system than lower-paid people would.

This means that although progressive indexing is an attractive idea from a social-justice point of view, it would reduce Social Security's political support by making it seem more like welfare than an earned benefit.




© 2006 MSNBC.com

URL: http://www.msnbc.msn.com/id/11235990/site/newsweek/from/RSS/

[yellowdogmi]

1. K&R. Can't get congress to approve it.

He will just sneak it in on us. Let us light up the phone lines. This is BS. If * has a program it should be debated in our house not slipped in through the back door and passed with out a discussion. God how I hate this administration. Sneaky freaking bastards. Arrrrghhh!

[demnan]

2. They should do this

I know it sounds like I'm saying, "give the old folks the shaft" but I'm not. Do you realize that millionaires can draw on social security and on Medicare benefits? While at the same time the working poor have no health coverage. Something has to be done to balance this.

[papau]

3. the solution is no cap on wages or benefits - result is drop of 2% in

payroll tax -

The top end benefit is much lower that it's actual value in taxes - so the rich would be in the plan and getting huge checks as benefits - and the middlke class could look at their paycheck and smile.

When a rich man like Bush wants to be fair and help the poor - watch out