Phase-Out by the Numbers

Jason Furman is doing some grand number-crunching over at the Center on Budget and Policy Priorities. As it turns out, the president’s “progressive price indexing” plan for Social Security would cut benefits for low-income people, contrary to White House claims. Three different groups, in fact: 1) Elderly widows with low incomes, provided their husbands aren’t in the bottom 30 percent of wage-earners; 2) Divorced elderly spouses, under similar conditions; 3) Children with low incomes, under similar conditions. Now obviously “save the widows and children” won’t gain much traction among conservatives, but it would be nice if pseudo-intellectuals like David Brooks stopped pretending that Bush’s phase-out scheme is something that people who care about reducing poverty should support.

Oh, and another good Furman study here, noting that the president’s proposed benefit cuts would only eliminate about 59 percent of the long-term funding gap in Social Security. In fact, under the president’s plan the Trust Fund would be exhausted in 2047, only six years later than the so-called “crisis” date of 2041. At that point benefits would then need to be cut another 15 percent, on top of the cuts Bush has already proposed. So the president’s trotting out benefit cut after benefit cut, and they even his own proposals won’t be enough to patch up the “crisis” that supposedly exists. Why? Wasn’t this supposed to be the biggest crisis that this country has ever confronted? So why is the White House unveiling a plan that only eliminates about half of the shortfall? Is there any reason to take this clown show seriously? (Hint: no.)

The other thing to note here is this: If we were to do nothing about Social Security, and the economy keeps growing the way it has for the past 50 years, we won’t need to cut benefits at all. Not one cent. But under the president’s price-indexing plan, even in the best-case scenario, in which the system becomes fully solvent because of high growth, we’d still have to have benefit cuts. The president wants cuts no matter what happens. No thanks. I’ll endorse the do-nothing plan any day of the week over this.