Tuesday, February 07, 2006

Stitching a New Safety Net

So goes the title of the latest Econoblog, where Mark Thoma of Economist's View and I discuss the changing resources and expectations of social insurance. The teaser:

For many years, workers could manage their medical expenses with employer-provided health insurance and Medicare and look forward to underwriting their golden years with payments from a defined-benefit pension and Social Security.

But the landscape of social insurance is shifting. Many large corporations are moving their employees from traditional pensions to riskier 401(k)s and asking workers to pay more out of their own pockets for health insurance. At the same time, Social Security and Medicare, the two venerable entitlement programs, are facing growing demographic strains as the vast baby boom generation reaches retirement age.

The Wall Street Journal Online asked economist bloggers Mark Thoma and Andrew Samwick to explore how we how arrived at this point and discuss what workers and retirees might expect in the future, as the composition of the social safety net continues to shift.

Thanks to Mark for exchanging ideas. Enjoy!


Arun Khanna said...

U.S. needs to move towards a point based immigration system similar to Australia, Canada and News Zealand. This will provide American economy with 'new blood' which is economically productive and would help meet the demographic problem underlying social security.
I suggest for every illegal immigrant deported, let a skilled legal immigrant be welcomed!

bakho said...

Did you know that Mr Bush has sneaked his SS privatization plan into his submitted budget? WTF way is this to build support for a proposal? This is a JR Ewing type power play sure to avoid the type of scrutiny necessary to avoid bad legislation like the Medicare Drug Bill. Allan Sloan has the details.

"Nevertheless, it's here. Unlike Bush's generalized privatization talk of last year, we're now talking detailed numbers. On page 321 of the budget proposal, you see the privatization costs: $24.182 billion in fiscal 2010, $57.429 billion in fiscal 2011 and another $630.533 billion for the five years after that, for a seven-year total of $712.144 billion.

In the first year of private accounts, people would be allowed to divert up to 4 percent of their wages covered by Social Security into what Bush called "voluntary private accounts." The maximum contribution to such accounts would start at $1,100 annually and rise by $100 a year through 2016.

It's not clear how big a reduction in the basic benefit Social Security recipients would have to take in return for being able to set up these accounts, or precisely how the accounts would work."