Thursday, December 15, 2005

Proposed Social Security Solution

The Social Security debate has quieted, but the long-term solvency problem has not been addressed. Some of us continue to look for financially responsible and politically feasible solutions. Andrew Samwick, along with 2 others, has put forward such a proposal at Vox Baby (hat tip to Asymmetrical Information). The 3 individuals worked for Bush, McCain, and Clinton and should therefore represent a wide spectrum of political views on Social Security. That does not mean their plan has a high chance of success, but the plan does address the fundamental problem in a reasonable way.

The plan contains four primary elements: a gradual reduction in future benefits; an increase in the payroll tax cap; an increase in the retirement age; and the establishment of personal retirement accounts. The plan puts great emphasis on fiscal responsibility – there are no transfers from general revenues to achieve sustainable solvency.

The plan appears to have the essential elements necessary to solve the Social Security problem. According to Vox Baby,

[T]he Office of the Chief Actuary has evaluated it and certified that it would "easily satisfy the criteria for attaining sustainable solvency."

Read the whole post at Vox Baby.

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