Political process (hiding your plan, being overly general, refusing to lay out specifics) has trumped an accurate  focus on Social Security policy proposals. Democrats have hidden behind proposals ranging from the super-harsh Bowles-Simpson plan and the mostly harsh Diamond-Orszag plan. Republicans have played dodge-em, so pundits have said that the Republican plans are “probably” similar to the Graham, Paul & Lee plan, or the Bennett plan, and/or  finally the Ryan plan. Only the Ryan plan (2010) has been analyzed by real economists in a public forum, The Center On Budget and Policy Priorities. I anticipate immediate denial from the Ryan camp that this is their plan, since they have offered only  1)raising the retirement age, 2) reducing benefits for high income earners, and 3) sympathy for individual accounts. That is what the Ryan plan offers too.

Key Components of the Ryan Plan.

1. Progressive Pricing Index. A benefit cut for higher income earners. See Table 2 at the CBPP.org article.

2. Raising the retirement age. A benefit cut of 7% for every year the age of retirement is raised. Affects all beneficiaries of all income groups. See Table 1 at the CBPP.org article.

3. Ending the tax exclusion for employer provided health insurance.

4. Creation of Individual Accounts.

 

Sounds like Bowles-Simpson, right? Ah. But it is cumulative. Here is what it would look like for future beneficiaries.

Ryan plan, Fig. 1. cbpp.org

The monthly benefit ranges from just above 600 dollars a month and below 900 dollars a month in 2080. Benefits are disconnected from earnings. The economists at the Center on Budget and Policy Priorities estimated that 95% of High Earners will create Individual Accounts, and that 95% of low income earners will forgo creating Individual Accounts.  From the looks of the chart, figure 1, (above) Social Security would be reduced to a substandard income stream, falling near or below the 2011 Individual Poverty Threshold.

“Totally and Compleatly Harsh”

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