Conservatives supporting personal retirement accounts reacted negatively to President Bush’s announcement Thursday that he would seek a Social Security reform plan that includes future benefit cuts for middle- and upper-income workers. Bush held a prime-time news conference Thursday to unveil details of his vision for Social Security reform. For the first time, the President said he would support benefit cuts. “I propose a Social Security system in the future where benefits for low-income workers will grow faster than benefits for people who are better off,” Bush announced. Conservative critics immediately pounced on Bush’s remarks. “Cutting promised future benefits is unnecessary, could be politically explosive and might, I fear, undermine efforts to make Social Security permanently solvent by allowing workers the choice to save a portion of their Social Security contributions into personal retirement accounts,” said Lawrence A. Hunter, a senior research fellow at the Institute for Policy Innovation. Free Enterprise Fund President Stephen Moore told the Washington Post he worried about a “nightmare” situation resulting from the benefit cuts that could “cost Republicans the Senate in 2006.” (Moore serves as the economic affairs correspondent for HUMAN EVENTS.) The Free Enterprise Fund has endorsed a rival plan sponsored by Rep. Paul Ryan (R.-Wis.) and Sen. John Sununu (R.-N.H.). It would achieve solvency without tax increases or benefit cuts by allowing workers to invest in large personal accounts. Peter Ferrara, an Institute for Policy Innovation scholar and the mastermind behind the Ryan-Sununu plan, testified Tuesday before the Senate Finance Committee, which examined four plans that achieve solvency. Among those was a plan by Robert Pozen, a Massachusetts investment banker who served as a Democrat member of the Bush’s Social Security Commission in 2001. Pozen devised the proposal most resembling the President’s vision for “progressive indexing.” But as Hunter surmised after the President’s remarks, cutting benefits for the rich and middle-class while shielding the poor has a big downfall. “This decision could interject an element of class antagonism into the already rancorous and emotional discussion about how to reform Social Security,” said Hunter, who also serves as vice president and chief economist for the Free Enterprise Fund. “By deciding to cut promised future benefits, I fear the president inadvertently might divert attention away from the fact that, as demonstrated by several plans already introduced in the Congress, properly designed personal retirement accounts can make Social Security permanently solvent without raising taxes, cutting promised future benefits or raising the retirement age.”
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