Washington – In attempting to fix Social Security’s long-term problems without raising taxes, President Bush has chosen to recast the 70- year-old retirement program as one that would keep the lowest- income workers out of poverty but become increasingly irrelevant to the middle class and the affluent.
Under Bush’s approach of “progressive indexation,” typical low-income workers who earn about $16,000 a year today would be entitled to retirement benefits equal to about 49 percent of their wages, the same amount promised today.
But those earning an average income, about $36,500 in today’s dollars, would see big changes. Instead of replacing 36 percent of that person’s working pay, as promised under today’s system, benefits would cover only 26 percent of that person’s pay by 2075.
And people who earn $90,000 a year in today’s dollars, who would continue to pay as much as ever in taxes, would receive benefits equal to only 12 percent of their pay.
In his radio address Saturday, Bush sought to cast himself in the Democrats’ traditional role as a defender of the poor.
“Benefits for low-income workers should grow faster than benefits for people who are well-off,” he said. “By providing more generous benefits for low-income retirees, we’ll make good on this commitment: If you work hard and pay into Social Security your entire life, you will not retire into poverty.”
But critics say that approach would undermine a central bargain conceived during the New Deal: Social Security is not just a welfare program for the poor but a form of social insurance that people at all income levels pay into and from which they reap rewards.