From: Richard Arsinow <richard.arsinow@rauland.com>
Subject: Questions on Santorum Reform Plan
Senator Santorum, thank you for proposing your plan to reform Social Security. Based on your paper and your introductory post, I have the following questions about the plan:
*Have you drafted this plan into a bill? What is its number?
*Am I to understand that there is more privatization of lower wage-earners' FICA than that of higher wage-earners?
*It would appear that your plan proposes no changes to formula benefits, and that the formula benefits are financed by "clawing back" a certain amount from PRAs at retirement? Is this correct? In what percentage of retirements is it projected that the PRA balance will be sufficient to fully cover this "clawback"? What provisions are made for funding the benefits when the PRA falls short? Isn't it true that if the PRA falls short, the participant receives absolutely no benefit from the privatization, because his or her PRA is "clawed back" in its entirety?
*The rate of growth of benefits for higher-wage earners is a function of past increases in the wage base which every year make up a greater percentage of the AIME of new retirees, wage indexing before retirement, and cost of living indexing after retirement. All of these are deliberate features of Social Security. The wage base increase, in particular, has been paid for exclusively by higher wage-earners through their substantially increased payroll taxes since the wage base was increased. That being the case, why do you wish to 'slow the rate of growth of benefits for higher wage-earners'? How exactly do you propose doing so?
*In your post, you promise 'no increase in the...already-scheduled Normal Retirement Age (67)'. In your paper, you propose to reindex the NRA adjustment. Please explain.
*Regarding the values outlined in your post, many participants in this forum distinguish between a 'safety net', which is a minimum retirement benefit designed to keep any eligible retiree out of poverty, and redistribution of funds from higher wage-earners to lower wage-earners, called 'progressivity' by some. You seem to combine the two in value number 1. While I fully support the 'safety net', I question the fairness of such redistribution. I feel that it is at odds with your value number 5, improving EQUITY for all participants. Please address this.
*While not mentioned in your paper, at the end of your post 'no COLA adjustments' appears, without elaboration. Does this mean that COLA will be eliminated on Social Security benefits? When would they be discontinued? How would you counter arguments that this constitutes a benefit cut? What would you say to people whose Social Security benefits represent their major source of income over many years of inflation?
