Bush's Big Social Security Cuts

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Fri, 7 Jan 2005 11:57:31 -0500

Bush's Big Social Security Cuts

 

" Bush's Big Social Security Cuts " (under the Bush formula, Social

Security benefits fall to 20 percent of pre-retirement earnings, and

retirees in all categories -- from lowest-earning to highest-earning

households -- will fare worse under the Bush plan than under the

so-called " bankrupt " trust fund):

<http://montages.blogspot.com/2005/01/bushs-big-social-security-cuts.html>

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Y

 

 

 

 

 

Friday, January 07, 2005

Bush's Big Social Security Cuts

The Wall Street Journal reports that " [t]he White House, in a private

memo to conservative allies, strongly argues Social Security benefits

paid to future retirees must be significantly reduced " (Dow Jones

Newswires, " White House Memo Argues for Social Security Cuts, " Morning

Star, January 5, 2005).

http://news.morningstar.com/news/DJ/M01/D05/200501052052DOWJONESDJONLINE001056.h\

tml

 

Well, nothing new there -- the memo simply confirms the George W. Bush

administration's proposal to change " the formula that sets initial

Social Security benefit levels, cutting promised benefits by nearly a

third in the coming decades, according to several Republicans close to

the White House " (emphasis added, Jonathan Weisman and Mike Allen,

" Social Security Formula Weighed: Bush Plan Likely to Cut Initial

Benefits, " Washington Post, January 4, 2005, p. A1).

http://www.washingtonpost.com/wp-dyn/articles/A45726-2005Jan3.html?sub=AR

 

 

 

What's the Bush formula?

 

Under the proposal, the first-year benefits for retirees would be

calculated using inflation rates rather than the rise in wages over a

worker's lifetime. Because wages tend to rise considerably faster than

inflation, the new formula would stunt the growth of benefits, slowly

at first but more quickly by the middle of the century. . . .

 

. . . . . . . . . . . . . . . . . . . .

 

According to the Social Security Administration's chief actuary, a

middle-class worker retiring in 2022 would see guaranteed benefits cut

by 9.9 percent. By 2042, average monthly benefits for middle- and

high-income workers would fall by more than a quarter. A retiree in

2075 would receive 54 percent of the benefit now promised.

 

Estimated Monthly Social Security Benefit

 

. . . . . . . . . . . . . . . . . . . .

 

. . . Social Security benefits currently equal 42 percent of the

earnings of an average worker retiring at 65. Under the new formula,

that benefit would fall to 20 percent of pre-retirement earnings.

(emphasis added, Weisman and Allen, January 4, 2005)

http://www.washingtonpost.com/wp-dyn/articles/A45726-2005Jan3.html

 

(Graph)

 

If that doesn't sound bad enough, take a look at " Table 2. First-Year

Annual Benefits for the Median Retired Worker If Benefits Are Claimed

at Age 65, by Birth Cohort and Earnings Level " of the Congressional

Budget Office's " Long-Term Analysis of Plan 2 of the President's

Commission to Strengthen Social Security " (September 30, 2004).

http://www.cbo.gov/showdoc.cfm?index=5666 & sequence=0

 

 

Compare the figures in the " Current Law -- Trust-Fund-Financed

Benefits " column (which represent what retirees will receive if the

government does nothing at all to raise funds to pay out scheduled

benefits, such as raising the ceiling on taxable wages or giving the

trust fund an infusion from general revenues) and those in the " CSSS

Plan 2 -- Proposed Benefits + 1A " column (which show what retirees

will receive if Bush gets to " reform " Social Security). Notice that

retirees in all categories -- from lowest-earning to highest-earning

households -- will fare worse under the Bush plan than under the

so-called " bankrupt " trust fund?

http://montages.blogspot.com/2004/12/how-to-defend-social-security.html

 

In case you don't, Max Sawicky, an economist at the Economic Policy

Institute, spells it out for you in CAPITAL LETTERS: " Suffer the

Children " (MaxSpeak, January 4, 2005).

http://maxspeak.org/mt/archives/001029.html

 

 

 

 

 

* Critical Montages: <http://montages.blogspot.com/>

* Greens for Nader: <http://greensfornader.net/>

* Bring Them Home Now! <http://www.bringthemhomenow.org/>

* OSU-GESO: <http://www.osu-geso.org/>