Bruce may be the only NRO econopundit worth reading but his latest is not a ringing endorsement for Bush’s brand of Soc. Sec. reform:
One reason is that he has failed to make some arguments for reform that would buttress his case, such as the increase in economic growth from an expanded labor supply that would come from personal accounts.
Bruce’s main complaint is that the current system encourages early retirement. For a possible rebuttal to this specific argument for the Bush alternative, see Jesse Taylor. Other critics of the current system deem the 12.4% payroll contribution as a tax on employment even though workers receive future benefits. The argument is essentially that the expected marginal benefit is less than one-for-one with the payroll contributions paid. But let’s remember that the Bush plan cuts the benefits and leaves the payroll contribution rate at 12.4%. So is it clear that Bush’s plan would increase labor supply – or might it lower it?
And yes, it is true Bush will claim he has not presented a specific plan. For more – see the latest from President Bush on how there is no Trust Fund.