President Bush Rejected Glenn Hubbard’s Advice on Social Security Reform. GOOD!
This is Hubbard, writing in the New York Times:
Mr. Bush should have just jettisoned the term "personal accounts" and offered add-on expanded saving incentives – like letting individuals contribute more pretax dollars to I.R.A.'s and other pre-existing savings vehicles…. He [should] have supported a higher benefit for low-income workers than their record of contributions might offer, or by matching their contributions to private savings incentives with refundable tax credits. To pay for these changes and restore Social Security's long-run financial stability, Congress could have slowed the growth rate of benefits for middle- and upper-income workers.
Agree. Good thing Bush didn’t buy in.
I agree with a good portion of Hubbard’s op-ed. Bush’s insistence on on personal accounts was rather pointless– it was just a poison pill as, hopefully, the public option and universality-by-fiat will also be.
I don’t like the idea of means-testing Social Security benefit growth, but severely restricting C.O.L.A.s across the board could obviate some future payroll tax increases, the difference being available for personal investment.
The only solution to a Ponzi scheme is a funded system under which each generation pays its own way. Hubbards solution is a band aid approach, not a fundamental reform.