Slashing Social Security

A visitor to the blog sent a note to remind me that, in any Republican proposal for Social Security "reform", the core of the reform effort has been at a minimum to reduce benefits, if not to undermine or eliminate the program (and that he's old enough to remember all of them). He observes, "Socially the program has made a lot of potential homeless old people into occupants in senior citizen’s housing." He agrees that there are relatively simple cures to the present system, for example, by raising or eliminating the cap on payroll taxes, and applying the tax to all income and not just wages.

He describes the Republican efforts, at their core, as "class warfare" tactics. He observes that Social Security "was and is, essentially, a redistribution of income", noting, "There is no attempt to use wealth or capital for this program, yet." (And, in my opinion, there won't be - but it does seem fair to point out that the exclusion of wealth from the Social Security formula and the cap on payroll taxes largely transforms it into a subsidization of the poor by the working classes - one might infer that if Bush could effect a wealth transfer to Wall Street and further reduce Social Security taxes on the rich without private accounts, he might not be so 'hot and bothered' about 'reform'.)

Within that context, today's Times reports, despite Bush's talk about private accounts,

nearly every leading Republican proposal on Capitol Hill acknowledges that private accounts by themselves do little to solve the system's projected shortfall of at least $3.5 trillion. Instead, those proposals rely on deep cuts in benefits to future retirees.

And, as might be expected,

Mr. Bush, who is likely to step up his call for private accounts when he acts as host of a two-day conference on the economy this week, has steadfastly avoided any reference to cutting future benefits.

One might cynically suggest that, if you assume that the goal is to detroy the program and not to save it, balancing the books becomes irrelevant to Bush's equation. (Actually, he may be looking to create a windfall: destroy the program and the treasury notes that form the so-called "trust fund" suddenly need not be repaid.)