Thursday, May 12, 2005

Democrats' Diamond-Orszag SocSec Reform Plan

Stanley Kurtz on Social Security: "The Democrats actually do have a plan to save Social Security. Their proposal was authored by MIT economist Peter Diamond and Brookings Institute fellow Peter Orszag...Diamond-Orszag resembles the president's plan in that it proposes substantial reductions in the rate at which Social Security benefits increase. Diamond-Orszag's benefit "cuts" (really lower benefit increases) are smaller and more progressive than the "cuts" proposed by the president. Yet Diamond-Orszag pays for these smaller cuts with a substantial tax increase.

Once you see the Democrats' plan to save Social Security, several things become clear. First, Social Security is in serious trouble. Even the Democrats can't save it without painful changes. Second, the Democrats' own proposal shows that any realistic plan to save Social Security requires benefit cuts. The president's plan makes up 70 percent of the Social Security revenue shortfall through benefit cuts. The Democrats' plan makes up 50 percent of that shortfall through broadly similar cuts. It's tough to indict the president for callous indifference to the plight of retirees when we're talking about a 20-percent difference between two plans. Third, the Democrats' proposal shows that the real alternative to benefit cuts is a major tax increase. In short, once the public knows what the Democrats' plan actually says, it will quickly become impossible to use Social Security as a hammer against the Republicans."

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