Social Security Reform

I will give the Bush White House this much: the State of the Union speech was well written and it gave some details about what the Bush agenda will be in the next few years. However, those details are not to impressive. For all of the talk about how much change this will bring to the Social Security system, it just sounds like a bad deal when you look at the details. According to the Washington Post:

Under the proposal, workers could invest as much as 4 percent of their wages subject to Social Security taxation in a limited assortment of stock, bond and mixed-investment funds. But the government would keep and administer that money. Upon retirement, workers would then be given any money that exceeded inflation-adjusted gains over 3 percent.

That money would augment a guaranteed Social Security benefit that would be reduced by a still-undetermined amount from the currently promised benefit.

In effect, the accounts would work more like a loan from the government, to be paid back upon retirement at an inflation-adjusted 3 percent interest rate — the interest the money would have earned if it had been invested in Treasury bonds, said Peter R. Orszag, a Social Security analyst at the Brookings Institution and a former Clinton White House economist.