Monday, May 02, 2005

There are no benefit cuts

Under President Bush’s proposal, the Social Security benefit received today would be indexed to inflation and would have the same value in future dollars. FactCheck has today’s must-read explanation:

Both sides have a claim to accuracy, but neither is giving the full story and thus leaving citizens confused. The fact is that the current Social Security benefit formula would cause benefits for future retirees nearly to double in buying power over the next 75 years, even after adjusting for inflation.

What Bush is proposing is a plan that freezes benefits at their current buying power for upper-income workers, while other workers would continue to see benefits rise faster than inflation.

Compared to the buying power of benefits paid to today's retirees, that would not be a "cut" for anybody. Compared to the rising level of benefits provided by the current formula, that would mean a "cut" for upper-income and middle-income workers. And for the bottom 30 percent of earners, those making $25,000 a year, there would be no "cut" at all.
Read the whole thing and be sure to check out some additional links near the bottom.

1 comment:

Anonymous said...

Help me out here- how would you differentiate here between lower income and upper income workers, when most people travel through the tax brackets? Our income for the last 10 years has ranged from 6 figure income to 6 figure losses, depending on the year. We've gotten the earned income tax credit several times, and other times maxed the social security tax cap. We've had our retirement savings wiped out several times. We fully support personal accounts, seeing how everything we've paid thus far is completely gone, but shouldn't we have as good a shot at higher returns as anyone else?