Thursday, February 09, 2006

Bush to try stealth Social Security reform

Kevin Drum reports (from Allan Sloan) that the Social Security reform [That is, phase out of Social Security] is built into the administration's proposed budget.

Last year he announced it with great fanfare and delight in the State of the Union speech. Then he got his head handed to him. This year he is hoping no one will notice it in the proposed budget and sort of "accidently" pass it. What is the matter with these idiots?

This has little chance of passing, but bears a great deal of watching and close monitoring of the actions of our Congressional Representatives.

[Cross-posted to Politics Plus Stuff.]


At 3:50 PM, Blogger William Larsen said...

Alan Greenspan stated raising taxes to pay future Social Security and Medicare benefits pose a risk to the overall economy. Greenspan now says future benefit cuts are needed over tax increases.

President Bush stated Social Security benefits "should not be changed for people at or near retirement."

Both statements refer to the fact that both men believe that future benefits will have to be reduced because there will not be enough money otherwise. They are acknowledging that Social Security is on the road to financial ruin and that changes are needed if Social Security and our economy are to survive. What was known 60 years ago?
A. J. Altmeyer’s testimony

A. J. Altmeyer, Chairman, Social Security Board Before the House Ways and Means Committee November 27, 1944. “There is no question that the benefits promised under the present Federal old-age and survivors insurance system will cost far more than the 2 percent of payrolls now being collected. As I pointed out in my testimony of last year, none of the actuarial estimates which have been made on the basis of present economic conditions and other factors now clearly discernible result in a level annual cost of this insurance system of less than 4 percent of payroll. Indeed, under certain assumptions the level annual cost has been estimated to be as much as 7 percent of payrolls. On the basis of a 4-percent-level annual cost it may be said that the reserve fund of this system already has a deficit of $6,600 million. On the basis of 7-percent-level annual cost it may be said that the reserve fund already has a deficit of about $16,500 million.”

The payroll tax reached 4% in 1954 and 7% in 1966. However by this time Congress had increased coverage to non working spouses making even these tax rates inadequate. Way too little and way too late. The current tax is 10.6%.

The blame lies with Congress, which refuses to accept its responsibility for making the politically unpopular decisions required to fix the problem. Yet Congress holds hearings on all kinds of accounting, corporate governance, mutual fund, and media scandals. Congress has passed new legislation to correct other peoples' problems, making sure the interests of the American people are protected.

But who holds Congress accountable for its irresponsible governance of Social Security? The members of Congress are simply refusing to face the financial dilemma.

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