The Congressional Budget Office released a new analysis of a number of options to improve Social Security's long-term financing. What's really helpful about the new paper is that it shows how policy options affect both the program's solvency and the level and distribution of taxes paid and benefits received by different types of individuals. Without knowing both the financing end and the effect on participants it's hard to put together a plan that reflects your priorities for the program. It's definitely worth checking out for anyone interested in reform, particularly in light of the possibility that President Obama's fiscal commission may recommend changes to Social Security. 
Friday, July 2, 2010
New CBO Analysis of Options to Strengthen Social Security Financing
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Hmm Option 2 is effectively equivalent to the Northwest Plan advanced by me, Coberly and Arne, with some small changes in timing. CBO scores it as backfilling the entire gap, one would hope that it would at least be among policy options offered rather than being arbitrarily ruled out as it was under CSSS. Because an increase of 0.1% of payroll each year for 20 years, and assuming the employer/employee split means a reduction in take-home for the median income household of $25 per year. And while like all bleeding heart liberals I lament increasing income inequality, you have to be pretty pitiful to not be able to negotiate a 50 cent per week wage each year with a payoff being three more years in retirement.
I was pretty confident in our numbers, nice to see them endorsed by CBO.
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