NCPA - National Center for Policy Analysis


November 9, 2004

In 2001, President Bush's Social Security task force devised Model 2, which would create personal retirement accounts that would allow younger workers to set aside part of their income in a personal account they can own and control, and will pay part of their benefits at retirement.

Social Security benefits under Model 2 should be compared to what Social Security can currently afford, not what it promises. The reason? The program can't meet its promises without a cash infusion of an extra $11 trillion, says Matt Moore, a senior policy analyst with the National Center for Policy Analysis.

If we compare reformed benefits to what Social Security promises, we unfairly give the current system an $11 trillion "leg-up" in the competition, explains Moore:

  • The SSA says a median earner ($35,277 in 2002) Gen-Xer retiring in 2042 would receive a monthly benefit of $1,392 under Model 2 which is 128.8 percent of what Social Security can afford under the status quo.
  • A low wage earner ($15,875) retiring in 2042 would receive a monthly benefit of $986 under Model 2, or 150 percent more than under the status quo, thanks to his personal account and the new minimum benefit rules included in Model 2.

Some people worry about the details -- administrative costs, low-income workers and inexperienced investors. But the Social Security Administration, the Government Accountability Office and the Congressional Budget Office show ways the accounts can be structured to keep administrative costs low, prop up the lower-income workers' accounts and protect inexperienced investors.

The president is ready to get started on his second-term agenda. It looks like Social Security reform will be a top priority. The president's approach is not risky or scary. It is well thought out and fair, says Moore.

Source: Matt Moore, "Social Security Blueprint," Washington Times, November 7, 2004.


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