Mostly rational politics, with occasional rants about how a few crazy Republicans are ruining the country.
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Friday, January 28, 2005
So apparently Bush has a plan for his Social Security plan. Problem with the plan, however:
Yet to be decided are several big questions, including how large the private accounts should be, how much guaranteed benefits would be cut and how to pay as much as $2 trillion needed in the first 10 years to effect the transition to a new system.
Hmm, that should be pretty easy. But congralations, Mr. President, on figuring out that people will have 3-5 fund choices. That's definitely the tough part.
Here's the right thing to do on Social Security:
Gradually raise the cap on taxable income. Currently only earnings up to $90k are taxed for social security (6.2%). That's regressive (ie. Bill Gates pay a much lower % of his income into social security than I do... will he really notice the difference?).
Direct investment in stocks. If it's really all about getting a better rate of return, let's invest the social security "trust fund" in equities, rather than T-bills. But in one large sum, not millions of smaller accounts. It's far more cost efficent, and you get a smoothing pattern because of the pooled risk - ie. you won't be screwed if it's a recession and your private account sucks at the time you want to retire. Republicans want private accounts to push their "ownership society" that they think produces more Republicans; but their plan is clearly economically inferior.