The wrong Social Security fix

Young people could stop the Bush proposal if they just tuned in and voted.

If ever there were a time for young people to take an interest in national politics, this is it. Last week, President George W. Bush finally got specific about shoring up the long-term fiscal health of Social Security. While those specifics are a welcome change from the vague rhetoric the administration has generally favored, they should make future retirees – including today’s college students – tremble in their boots.

The latest idea to captivate the Bush team is called “progressive indexation,” which calls for cutting benefits for the wealthiest retirees while maintaining current benefit levels for the poorest elderly. The proposal would wield cuts by gradually tying benefit increases to inflation rather than wage growth. In time, the cost of living increases less than real wages.

Linking Social Security benefits to inflation (the “indexation” part) is problematic enough. The program was originally designed to lift seniors out of poverty and minimize the wealth gap between the young and the old. In an era of massive health-care inflation and slimmed pension benefits, indexation would move future retirees one step closer to poverty.

The other part of the Bush equation – limiting benefit cuts to the wealthy – is equally troubling. Slashing Social Security benefits for millionaire chief executive officers is intuitively appealing, but the Bush administration has a tortured definition of “wealthy.” Under calculations from the liberal Center on Budget and Policy Priorities, an individual earning an average annual salary of $58,411 and retiring in 2055 would see his or her benefits fall by more than 30 percent.

Additional cuts would come under any form of private accounts – an idea Bush continues to promote.

The president should be applauded for putting cuts on the table. Most observers agree benefit cuts cannot be avoided if policy-makers are to make the program financially sound. But those cuts would be less painful if they were complemented with other reforms – such as continuing to tax income after it crosses the current $90,000 threshold and raising the retirement age to match the longer life expectancies we now enjoy.

Fixing Social Security on the backs of today’s youth is a bad strategy. It’s one young people could prevent if they just tuned in and voted.