That article had more info about the wage-based/price-based thing. Still clear as mud, but at least the mud has a few snail-trails in it. I will get to the bottom of this eventually.
From this, it looks like they're talking about indexing the base benefit from todays wages based on price and this is not about the cola at all. If so, that's an interesting idea but then you'd have to assign everyone the same benefit regardless of wages, which is a dramatic shift.
"But the biggest single idea is included in the plan the White House most often points to, abandoning the practice of setting benefits as a share of people's pre-retirement earnings."
<<The simplest cut is the one developed by Mr. Bush's advisory commission on Social Security in 2001. That proposal, which White House officials often cite as a model for how the system could be changed, would change the way future benefits are calculated.
Instead of setting benefits as a share of a person's pre-retirement wages - about 42 percent, for a middle-income worker today - the government would link future benefits to inflation.
Because wages generally rise faster than inflation, analysts say the savings could total more than $10 trillion and would wipe out the entire projected deficit for Social Security in one easy move.
"If you just switched from wage-indexing to price-indexing, you would save so much money over that period you would actually wipe out the entire imbalance," said Kent Smetters, an associate professor at the Wharton School of Business who worked on entitlement issues in the Bush Treasury Department.
But many analysts contend that the change could also leave future workers with a huge drop in income as soon as they retire and would erode a basic premise of the current old-age system.
Under today's law, a middle-income worker who retires in 2065 would be entitled to an annual Social Security benefit of $26,400, or about 40 percent of the worker's wages.
Under the proposed change, that same worker's benefit in 2065 would decrease by 40 percent to $14,600, about 22 percent of the wages. That prospect troubles many experts, including some conservatives.>> |
