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February 28, 2005

The Wall Street Journal Comes Through Once Again

You know, newspapers like the Washington Post would do a *much* better job at informing their readers if they just had somebody summarize and rewrite the previous day's Wall Street Journal stories. Here it is Jackie Calmes who comes through:

WSJ.com - In Bush's 'Ownership Society,' Citizens Would Take More Risk: "No program better exemplifies the longstanding social compact than Social Security: Workers are taxed to pay benefits to current retirees and the disabled, and expect to be helped by future generations. But with fewer workers supporting swelling ranks of retirees, the program by midcentury won't be able to pay full promised benefits. That is the problem Mr. Bush wants to fix. He calls it 'reforming great institutions to serve the needs of our time.'

Yet the centerpiece of his fix -- letting workers divert a third of their 12.4% payroll tax to personal accounts, which they could invest, spend in retirement or pass on to heirs -- won't help Social Security's long-term solvency, the president acknowledges. That, he says, will require separate reductions in future benefits.

His private accounts have another purpose. 'When more people own something, the more they'll have a stake in the future of this country,' he said recently in a speech....

Critics say Mr. Bush's vision is blind to economic risks facing Americans, especially lower-income workers. William Gale, a Brookings Institution economist, dismisses the president's agenda as 'the Dismantling-the-Safety-Net Society.' Some applaud his rhetoric, but say the president's policies... favor the well-off. The poorest workers, exempt from income taxes, can't take advantage of tax breaks for savings. Eugene Steuerle, a Reagan-era Treasury official now at the Urban Institute, titled a recent analysis, 'An Ownership Society, Or A Society For Those Who Already Own?'....

The president's plan for individual accounts is a major departure.... Mr. Bush argues private accounts would allow workers to earn more through investments than they would receive from Social Security, especially after traditional benefits are reduced to make the system sustainable. His plan would limit choices to a small menu of stock and bond mutual funds....

Posted by DeLong at February 28, 2005 08:22 AM