A fair indexing adjustment would anticipate Bush deficit tax increases

[papau]

The initial benefits for a new retiree are determined in part by the overall level of wages in the economy today, not just by the person's past earnings, since those past earnings are brought forward via "wage-indexing," which in effect maintains the value of the retirement benefit in terms of letting the retiree retain the improvements in the Standard of living that have occurred since he started working.

The indexing formula can and perhaps should be changed to cut costs and also be fair to both retirees and workers. With Bush increasing the birth tax by refusing to tax the current rich to cover current governmental expenses, that deficit will require higher taxes on our kids. The Standard of living increase in the future will be better measured by a wage index that was based on aftertax wages, than it would be if we continue to use today's before tax wages for the index.

The shift is not a big money saver - but it does save money. One calculation done by BusinessWeek suggests that benefits for new retirees would rise by roughly 0.2 to 0.3 percentage points less than pretax wages each year, with someone who retires in 2080 recieving about 14% less than under the current system (in comparison to the Bush CPI replacement that cuts benefits more than 50% in 2080.

Current government projections assume Medicare/Social Security needs/tax increases move future pretax 1.1% per year wage increases to 0.9% after reflecting those tax increase. Reflecting the tax increase needed for the Bush deficits means an additional reduction.