The Democratic National Committee accused the Bush Administration of trying to cut Social Security benefits by shifting to price indexing from wage indexing. I suggest that the administration should plead guilty.
Future benefits that are promised under the current system are higher than what can be covered by taxes under current law. That means that either benefits have to be cut or taxes have to be raised. The status quo is not sustainable. If you are planning to retire in 2022, 2042, or 2075, either your benefits have to be cut or your taxes have to be raised. Those are your choices.
Elsewhere, Tyler Cowen gives a cautious thumbs-up to price indexing.
Also, Brad DeLong has some important proposals, including a nonpartisan board to adjust the retirement age and a private account that supplements Social Security instead of replacing it.
For Discussion. What would be the advantages of disadvantages of using private accounts to supplement Social Security?