Link Benefits to inflation, rather than average wage increase, is a cut in the guaranteed benefits of retired people, making the benefit to what other folks are earning relationship lower as time goes on: so is this a good?
And Mankiw's "no free lunch" is not stopping at that - other cuts are needed if the rich are not to pay back the payroll tax they stole to finance the Bush tax cuts for the rich. But our media sure is keeping the real story quiet - wonder why?
http://www.nytimes.com/2004/12/03/politics/03social.html?oref=login&oref=loginFrom Bush Aide, Warning on Social Security
By EDMUND L. ANDREWS
ASHINGTON, Dec. 2 - Calling the current system of Social Security benefits unsustainable, a top economic adviser to President Bush on Thursday strongly implied that any overhaul of the system would have to include major cuts in guaranteed benefits for future retirees.<snip>
"The benefits now scheduled for future generations under current law are not sustainable given the projected path of payroll tax revenue," he added. "They are empty promises."
Mr. Mankiw's remarks suggested that President Bush's plan to let people put some of their Social Security taxes into "personal savings accounts" would have to be accompanied by changes in the current system of benefits.
Throughout the presidential campaign and in remarks after he was re-elected, Mr. Bush focused almost exclusively on these accounts as a crucial way to shore up Social Security. Most experts have said that the accounts must be accompanied by other belt-tightening measures. When asked about cuts in future benefits, Mr. Bush, however, has said only that any overhaul should make no changes in the benefits for people in retirement or near retirement. The president has said that overhauling the Social Security system would involve "costs," but so far he has not indicated what those might be.
In his speech, Mr. Mankiw flatly rejected raising taxes as a means of saving the federal retirement system, which government actuaries say is on track to become insolvent by 2042 if no changes are made to the current law. Instead, he took particular aim at a specific feature of current law under which retirement benefits are linked to the rise in wages rather than the rise in consumer prices.<snip>
COMMENT:Why do we say insolvent when we mean it will need a retirement age change in 2042 from the Reagan 67 to 70?