The Gamble of Social Security Act

Josh Marshall has posted a link to the detailed summary of the Kolbe/Boyd plan to phase out save Social Security (6 page PDF). A few things jump out initially:

The defined benefit for an average wage earner would be reduced by 19% and benefits for maximum wage earner would be reduced by 25% below the benefit levels available under current law. These reductions DO NOT take into account the balances accumulating in workers' personal accounts. It is expected that workers will generate balances in their individual accounts that will at least compensate for the reduction in guaranteed benefit.

Notice anything missing there? Like what happens if the private accounts don't meet their expectations and make up the difference? There is nothing I've seen that accounts for that. In essence, we remove the Social Security net for retirees and wish them all the best, eventually recreating conditions that caused the initial creation of Social Security.

One other thing:

Provision: Establishes a "longevity factor" that reduces initial benefits based on increases in life expectancy so that total expected benefits over an individual's lifetime would remain constant. If, for example, life expectancy for an individual retiring at age 65 increases by 10% over current life expectancy, the initial benefit would be reduced by 10%.

So if I read that right, the longer you live, the smaller your initial benefits. And that's only based on life expectancy, because no one can predict how long you'll actually live. So if you die a few months after 65, you got smaller benefits for nothing. And who is more likely to die earlier? It's not the wealthy, that's for sure. All seniors are no longer created equal.

There's more there in economic speak that I don't fully understand. I'm sure we'll see comments throughout the day elsewhere.