PassionateCentrist

I'll give President Bush some credit: he's actually talking about reforming Social Security. The first step to solving a problem is to admit you have one. Up until now all goverment - Democrat or Republican - hasn't admitted that problem. Witness John Kerry, who said during one of the presidential debates that he and fellow members of Congress already voted to save social security.

However, is Bush a wolf in sheep's clothing? Is his proposal on private accounts a true movement to privitize social security or an attempt by the right to start dismantiling it? We'll likely get an idea which way Bush is headed when he starts talking about transition costs. These are the $2 trillion or so it would take to have the younger generation divert some social security funds to private accouns while still paying the older generation. Alan Sloan argues in this week's Newsweek that Bush will do some accounting tricks to not have to deal with the transition costs by saying a reduction in benefits in the long term to those younger workers will make the changes a net wash on the system. If he takes that route, it will just be another Washington game to give lip service to a big issue and seem like you are making an impact and taking it head on. We'll see how this plays out. I'm personally not totally against private accounts if the transition costs can really be accounted for in the plan.

However, one thing I haven't seen talked about in the blogs or major media is the idea put forth by Matt Miller's "Two Percent Solution" (http://www.twopercentsolution.com), which argues that just by changing how social security is indexed by inflation to "prices" rather than "wages" would slow down benefits enough to keep the system solvent.

And "wage" indexing is overpaying current social security recepients since wages are rising faster than prices due to productivity gains. People in 2000 were getting 1.2 to 1.4 times their contribution into the system (adjusted for inflation).

I haven't seen any discussion in the blogs or major media about this theory. Perhaps it's too arcane. But if shaving just a bit of benefits solves the problem - and may be justified - why not go this route?