Tuesday, May 03, 2005

Democrats Against Squeezing the Rich

Financial services executive and point-man on the Social Security debate, Robert Pozen, defends "progressive indexing" and argues in favor of reducing benefits over raising taxes. "If the litmus test of a reform plan is not cutting scheduled benefits for any significant group of workers," he says, "then no viable plan to restore Social Security's solvency will pass muster." Actually, scheduled benefits are falsehoods, because they are promises that the government eventually cannot keep. So it doesn't make sense to say that an average worker must have his benefits cut in 2045 by 16% when he starts collecting under the progressive indexing plan, because the projected default of the system in 2041 will cause a 27% reduction in promised benefits.

Pozen basically wants to squeeze the rich, and let them have private accounts in exchange. It is interesting that the Democrats won't go for such a plan in the name of keeping the status quo, which will result in a collapse of the system. The Democrats are hardly more than obstructionists at this point.


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