Kaus on Diamond-Orszag Plan

Let's Not Save Social Security - Once it's fixed, we can't fix it again!: "The most frequently cited Democratic alternative plan is the one proposed by Peter Diamond and Peter Orszag--call it the Two Peters Plan. They estimate the total 75 year Social Security shortfall at 1.9 percent of taxable payroll, and would meet it by a combination of tax increases and benefit cuts...

In addition to the benefit cuts outline above, Diamond and Orszag have the current 12.4 percent Social Security payroll tax rising to 15.4 percent in 2078 and continuing to rise "slowly over time thereafter." Even if the Medicare tax is kept at its current 2.9 percent (a seeming impossibility) that means total FICA payroll taxes in excess of 18%. You want to try to finance universal health care on top of that? I don't...

Nobody--neither the President, nor Pozen, nor the Democrats--is talking about radically reducing the size of the program, Australia style. They're all talking about saving a program that consumes somewhere from 12 to 17 percent of the national payroll. Once its financial imbalance is solved it will be virtually impossible to restructure... Before they stabilize the system at this high level of GDP consumption--cementing it in place,in effect--Democrats may want time to think about whether they want to devote such a large part of society's resources to a universal check-mailing scheme. My guess is Democrats will need at least some of those GDP points for health care. It will be easier to get them if Social Security is still perceived as a progam in need of reform, as opposed to a program that got fixed back in 2005."