Social Security Reform in 2005 and Beyond

Abstract

Social Security reform started out with a bang in 2005. President Bush made it the centerpiece of his 2005 State of the Union address, and he spent the early months of the year on a 60-day, 60-city tour around the country in which he touted his pet project of creating Social Security "personal retirement accounts." Despite its early prominence, Social Security reform ended with a whimper by the end of 2005.

This Article describes and analyzes three of the most politically salient reform proposals in 2005: (1) President Bush's "Personal Retirement Accounts," (2) Robert Pozen's "Progressive Price Indexing Plan," and (3) Proposals to Fund Personal Retirement Accounts with Social Security's Annual Surpluses. The Article then explains why Social Security reform failed despite President Bush's Herculean effort to create personal retirement accounts. Finally, it concludes by discussing the prospects for reform in 2006 and beyond.

Keywords: social security, retirement income policy

JEL Classification: H55, J26