Bush Plan Likely To Cut Social Security Benefits By Almost One Third

The Washington Post gives us some warnings about the likely cuts in Social Security benefits which are expected under Bush's plan:

Social Security Formula Weighed

Bush Plan Likely to Cut Initial Benefits

By Jonathan Weisman and Mike Allen

Washington Post Staff Writers
Tuesday, January 4, 2005; Page A01

The Bush administration has signaled that it will propose changing the formula that sets initial Social Security benefit levels, cutting promised benefits by nearly a third in the coming decades, according to several Republicans close to the White House.

Under the proposal, the first-year benefits for retirees would be calculated using inflation rates rather than the rise in wages over a worker's lifetime. Because wages tend to rise considerably faster than inflation, the new formula would stunt the growth of benefits, slowly at first but more quickly by the middle of the century. The White House hopes that some, if not all, of those benefit cuts would be made up by gains in newly created personal investment accounts that would harness returns on stocks and bonds.

(Later in the article:) "This is going to be very much like sticking your hand in a wasp nest," said David C. John, a Social Security analyst at the conservative Heritage Foundation and an ally of the president. "And the reaction will be similar."

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