How Many Benefit Cuts Does Progressive Price Indexing Entail?"

Progressive Price Indexing Will Cut Guaranteed Benefits in Addition to the Privatization Tax. The progressive price indexing plan that the president has indicated he prefers and that Robert Pozen has proposed will include two benefit cuts for workers. "Under private accounts like those the President has proposed, the cost of the private accounts is offset by reducing substantially the Social Security benefits of those who elect the accounts. If progressive price indexing is combined with private accounts of this nature, Social Security benefits will be lowered twice — once due to the indexing changes and a second time to pay for the private accounts. As this analysis explains, the result would be that millions of middle-income workers would receive little or no Social Security benefits in retirement. They would be left largely with only their private account." [Center on Budget and Policy Priorities, 4/26/05]