Thursday, November 11, 2004
Bush's plan for social security
Fresh from re-election, President Bush is dusting off an ambitious proposal to overhaul Social Security, a controversial idea that had been shelved because of politics and the administration's focus on tax cuts and terrorism.
Bush envisions a framework that would partially privatize Social Security with personal investment accounts, similar to 401(k) plans, that would be voluntary for younger workers.
American workers currently pay 6.2 percent of their taxable income into Social Security, and employers match that amount. A starting point for an overhaul is a plan proposed by a presidential commission in 2001 that would divert 2 percent into private accounts. The remaining 4.2 percent — and the taxes employers pay — would go into the system, helping fund benefits for current retirees. That leaves an estimated shortfall of about $2 trillion to continue funding benefits for current retirees.
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Bush has not said how the $2 trillion transition costs would be funded, nor did his commission. Record deficits, Bush's desire to make his five rounds of tax cuts permanent and the rising cost of war in Iraq and Afghanistan are major obstacles.
Story.
posted by chris at 1:09 PM
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