Friday, April 29, 2005

Robert Pozen on The Progressive Solution to Social Security Reform

Comment from Robert Pozen, the Democrat cited by President Bush last night, in today's WSJ - OpinionJournal: "Ever since President Bush first floated the idea of personal retirement accounts as part of Social Security reform, fiscal hawks have been going berserk: 'This will only increase future government borrowing when the federal deficit is already sky high!,' they say. Well, they're wrong. There is a way to have personal retirement accounts, or PRAs, and actually decrease the government debt. If PRAs of modest size are combined with something called the 'progressive indexing' of benefits, the government borrowing needed to finance Social Security would be dramatically reduced.

What is progressive indexing and how does it work?"

Read it all to see the basics of the social security reform plan from the source.

UPDATE: From Saturday an article with more about Mr. Pozen himself-
The New York Times > Washington > A Democrat on Bush's Social Security Team: "A registered Democrat, Mr. Pozen donated money to the presidential campaign of Senator John Kerry last year and voted for him on Nov. 2. He was a classmate of Hillary Rodham Clinton at Yale Law School.

But all that has not stopped President Bush from embracing Mr. Pozen's main idea to bring the nation's public pension regime into financial balance: a plan called "progressive indexing" because it would protect the lowest-wage workers from benefit reductions while progressively cutting benefits of higher-earning workers.

Mr. Pozen, who served on Mr. Bush's commission in 2001 that developed initial plans for carving private accounts out of Social Security, has been thrust into the spotlight by Mr. Bush's embrace of his proposal. But Mr. Pozen says his ideas on public pensions are free of politics.

"I consider myself a middle-of-the-road guy who tries to be carefully nonpartisan on this issue," he said. "I believe passionately in Social Security reform."

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