WASHINGTON — The Concord Coalition said today that President Bush’s
suggestion to reduce Social Security’s long-term cost by modifying the benefit
formula is a positive step in the debate over how to shore up the system’s
finances.
WASHINGTON — The Concord Coalition said today that President Bush’s
suggestion to reduce Social Security’s long-term cost by modifying the benefit
formula is a positive step in the debate over how to shore up the system’s
finances.
“Cost saving measures are an essential part of any Social Security reform plan
— with or without personal accounts. The President deserves credit for
recognizing this fact by proposing a change in the benefit formula that would
substantially improve the system’s fiscal sustainability while preserving all
promised benefits for those who rely on them most. This change alone would not
be enough to close the system’s financing gap but Congress should give it
serious consideration as part of an overall reform plan,” said Concord Coalition
executive director Robert L. Bixby.
“The idea deserves consideration because Social Security currently promises far
more than it can afford to pay. One of the main reasons for this is that future
benefit levels are automatically scheduled to rise not only nominally, but in
real value. In other words, they will be worth more because they will rise
faster than inflation. Benefits can therefore be reduced from projected levels
and still grow relative to the value of today’s benefits. Some will insist,
however, that this would result in deep ‘benefit cuts’ when compared to the
current system. But it is fundamentally unfair to judge any reform plan against
the false hypothetical that the current system is solvent and can deliver
everything it promises. It can’t. The relevant comparison for any reform plan is
with what current law can deliver, not what it promises,” Bixby said.
“There are only two options for addressing the gap in Social Security’s
finances: reduce promised benefits or raise taxes to pay for them. It is easy to
demagogue either option because they require everyone to accept the notion that
there is no free lunch. However, if current efforts to restructure Social
Security are to be effective, these hard choices must be part of the solution.
While there is plenty of room for discussion about the proper mix of any reform
package, the President’s proposal for changing the benefit formula should help
shift the debate toward these fundamental questions. It is a positive step,”
said Bixby.
CONTACT:
Tristan Cohen
(703) 894-6222
[email protected]
