See You Monday
A reminder to those in the DC area: Jeff, Maya, and I will be presenting our Social Security plan at the American Enterprise Institute on Monday at noon. Discussing the plan will be Kent Smetters, Jason Furman, John Rother, and Chuck Blahous. Moderating will be Doug Holtz-Eakin A description of the plan and the Social Security Administration's evaluation can be found here. The Congressional Budget Office's report on the plan can be found here.
3 comments:
Eighty-five percent of benefits are already subject to income tax for households with other income above some thresholds that are not all that high, so there isn't much scope for additional income taxes.
We certainly considered greater progressivity in the benefit formula, and I (as the conservative) was all for it as a way to reduce costs. Ultimately, though, Jeff (the liberal) was reluctant to cut benefits at the top too much, for fear of the program coming to resemble too much of a welfare program and not enough of a universal program.
It seems Max Sawicky was present asking his hard question(s) as he decided he was opposed to this plan. No real surprise, I guess - but Max is suggesting your plan would divert resources from the Trust Fund to the General Fund. As you may recall, I oppose any such diversion and I thought you agreed with this general proposition. Is Max confusing this issue - or do we disagree on this?
I didn't mean to suggest the plan was transferring money from the trust fund to the general revenue (there is no "general fund", but I know what you mean). My rough summary of the plan is the substitution of forward funding, based on benefit cuts, new payroll tax revenue, and PRA contributions, for the admittedly uncertain prospect of future funding from "general revenue" -- really income taxes.
This has an element of redistributive justice -- giving a break to future generations; they will be richer than us, but that doesn't bother me too much. I am more disturbed by the distributive implications of not using more income tax revenues, either sooner or later. And I don't buy the pre-Keynesian obsession with 'national saving,' but that's a long story.
Max Sawicky
http://maxspeak.org/mt
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