Via Joshua Marshall provides a link to the GOP’s weekend retreat reading material. There is a lot of misleading nonsense in this document, so it may attract a lot of rebuttal comments from various blogging economists, but there is a set of claims in the very opening summary , which I’d like to focus on.
Under the heading “The Time to Act is Now”, the GOP talking points read:
The longer we wait to take action, the more difficult and expensive the changes will be. Under the current system, today’s 30-year old worker will face a 27% benefit cut when he or she reaches normal retirement age.
Doing nothing will cost the most in the long run – resulting in either dramatic tax increases or severe benefit cuts.
The first members of the Baby Boom generation turn 60 next year, in 2006. This is not a distant problem, but something that is coming our way quickly.
Under the heading “President Bush Has Set Forth Broad Principles to Guide Reforms”, we see:
There will be no benefit change for those receiving Social Security and those near retirement. For seniors, nothing will change, and nobody is going to take away their check.
We will not raise payroll taxes – higher taxes would slow economic growth.
Fiscal responsibility lowers growth? And those retiring in 2006 will be happy to know that Social Security reserves will continue to rise for another 15 years and last another 30 years after that. As far as workers in the future facing the prospect of benefit cuts relative to what the projections show now – it would seem workers in the future would likely fare even worse under Bush’s “Model 2”.
But the time to act now really puzzles me since the GOP is ruling out more payroll contributions AND is ruling out reductions in benefits for folks born before 1945. As I noted here, adopting a set of reforms in 2010 versus adopting them now would have exactly the same costs under these two constraints.
This is the GOP case for raiding the lock box? Ho-hum!
Update: There is a lot of advise on what not to say in this document and one piece of it is quite honest:
Acknowledge risks: Many of your listeners will not have a lot of financial education or investment experience, but they know that markets have risk – and nothing is guaranteed.
Yes, higher expected return comes at the price of higher risk. Glad this document advises the proponents of Social Security Deform to finally be honest about this particular point. But then doesn’t this mean a lot of supporters will have to be silent? In fact, there are lots of places in this very document where it sort of violates this cautionary note of honesty and good finance.