Bush SS Plan places hardship on middle-income wage earners - Denver Post

DenverPost.com - EDITORIALS:

"President George W. Bush has finally put some meat on his long-standing but vague exhortations to reform Social Security - proposing to cut future benefits for all Americans who earn more than $25,000 a year. We commend the president for exempting the poorest workers from his proposed cuts. But his plan would still work a major - and unnecessary - hardship on middle-income wage earners.

The White House predicted Bush's proposal would solve 70 percent of a $11 trillion funding gap it predicts Social Security will face by 2080. (Projections by the nonpartisan Congressional Budget Office predict a much smaller shortfall that wouldn't begin until at least 2052.)

Under Bush's plan, workers who earned an average of $25,000 or less per year over their careers would continue to see their Social Security benefits rise according to the current formula, which computes benefit levels based on wage growth. Anyone earning more than $25,000 would see gradual benefit reductions, with those earning $113,000 or more taking the sharpest cuts because their benefits would rise only along with consumer prices, which historically increase at a slower rate than wages.

Those cuts in benefits would apply even to workers who did not opt for the private accounts proposed by Bush. Workers who did divert part of their existing taxes into private accounts would receive additional cuts in their benefits - which might or might not be offset by the earnings on those private accounts."