Friday, February 04, 2005

Thoughts on Social Security part I

President Bush is pressing toward his Ownersip society by asking Congress to fundamentally alter the structure of Social Security for the "younger worker".
Basically the presidents proposal would allow younger Americans to choose not to pay up to 4% of the 7 1/2% they now pay in Social Security payroll tax. Instead they would put that 4% into an account that could be invested in relatively conservative investments. When the worker retired he would (presumably although I have not seen this spelled out yet) recieve less Social Security benefit but would have that benefit supplemented by payments out of this account. How the reduction in payroll taxes paid would effect potential disability or survivor benefits is unclear. I plan several posts on this subjcct. My initial thoughts:
At first it would seem to be a bold step taken by President Bush to touch the "third rail of American politics" and that impression is bolstered by the knee jerk reaction of the seemingly all powerfull AARP (a group I refuse to join because of their selfish and bullying politics). Actually it is a brilliant move for aeveral reasons.

1. President Bush can't be hurt by this proposal because he never has to stand for reelection.
2. Even if the proposal is defeated now the try will put him in good stead with History. Social Security must eventually be changed or die and it only gets tougher later. If the President fails he will get the credit for trying when that failure puts Social Security in an untenable position in future years.
3. If the President is sucessfull it will reduce the power of the welfare mentallity that says we must suckle at the teat of the Federal goverment for our security

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