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April 29, 2005

Screwing the middle class (again)

At last night's press conference, Bush announced his plan to cut Social Security benefits for all but those in the "low income" bracket.

The proposal is based on something called the Pozen Plan, named after Bob Pozen.

Kevin Drum has created a "Pozen Plan Chart for Dummies" that gives a basic snapshot of what is to be expected:

The breakdown according to Kevin:

Basically, low income earners ($16K/year) currently get about 49% of their income replaced by Social Security. Under the Pozen plan, this would stay the same. Medium income workers ($36K/year), however, would see their replacement rate fall from 36% to 23% by the year 2100. The replacement rate for higher income workers ($58K/year) would fall to 14% and for maximum income workers ($90K/year) to 9%.

That's a substantial cut in benefits for everyone but the lowest income levels.

What Bush has created is a backdoor tax increase for those in the middle class. We still have to pay the same amount into Social Security but we'll be getting substantially less money.

Those in the $90k bracket and higher have a much smaller percentage of their income going to FICA. Taking less Social Security benefit isnt' the same kind of hardship that it is for the rest of us..who have higher percentages of income going out.

It's just another way to screw the middle class.

The rich have received massive benefits in tax cuts under this Administration. The middle class are getting a major squeeze and this makes it worse.

The right thing to do is raise the FICA cap to $120K and put more of this burden on the wealthy.

Update:Brad DeLong crunches the numbers...and sees an even bigger screw.

Posted by Carla at April 29, 2005 02:10 PM