The Mercatus Institute’s Charles Blahous writes on the proposals from the Bipartisan Policy Center’s 19-member Commission on Retirement Security and Personal Savings to improve Social Security’s financing and expand personal saving for retirement. Blahous was a member of the BPC Commission:
The Bipartisan Policy Center’s Securing Our Financial Future offers a new set of recommendations to strengthen Americans’ retirement income security. The full report can be found here and an executive summary here. A useful compendium of graphical information about the recommendations can be found here, and an affecting video on the financial challenges facing Americans can be viewed here.
The report was developed by the BPC’s 19-member Commission on Retirement Security and Personal Savings, co-chaired by former Senator Kent Conrad (D-ND) and Jim Lockhart, former principal deputy commissioner of the Social Security Administration (SSA). I served as one of the commission members and was deeply impressed by the co-chairs’ leadership and process acumen, as well as by the other commission members and an exceptionally capable team of staff.
As the commission included experts holding a wide range of policy views, a consensus report was only possible because its work was relentlessly data-driven, and because the co-chairs skillfully incorporated input from the entire commission to forge balanced compromise. It is fashionable in political circles to characterize genuine compromise as containing something for everyone to dislike; a more accurate description in this case is that compromise would lead to far better results than either left or right would receive under the status quo.
Click here to read Blahous’s whole article. And click here to download the BPC report.
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1 comment:
"By ending preferential treatment for workers with fewer years in the workforce, an annual
PIA would increase the incentive to work"
It is clear that Blahous does know much about mathematics. The bend points and the replacement amounts 90%, 32% and 15% are already very regressive and penalize those with higher wages. Mathematically speaking, those who make high wages for a shorter number of years pay the same SS-OASI tax "value" as those who work 35 years at a lower wage.
The 1977 OASI benefit formula is actually very regressive, but over 35 years treats a dollar of wages equally when indexed. What Blahous is proposing is a compounding of the regressive nature of Social Security.
For those who work 40 years those making $8 an hour will see there initial OASI benefit increase by 21%. For those making $57,000 a year ($27.40 per hour) they will see no change. For those making the max they will see a reduction of 19%.
The proposed phase in period is five years starting in 2022. For those in the mid 50's they will get hit big time, not much they can do.
This is a prime example as to why Social Security is not fair, was never fair and cannot be made to be fair. Ponzi schemes create havoc when they fail.
I wonder how millennials will feel about this change?
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