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December 27, 2006

A Social Security solution in the making

Rumors are flying that the Bush administration and Congress are moving toward a grand solution to Social Security’s financial future. N.C. State University economist Mike Walden fills listeners in on some of the details.

"Well, we haven’t heard a lot about Social Security, but it is certainly still an issue. It was a big issue about a year ago, and then I think other events have pushed it off the table," says Dr. Walden, a William Neal Reynolds professor of agricultural and resource economics.

"But there are rumors that it may reappear in that there may be a grand compromise … between the Bush administration and the new leadership in the Congress over changing Social Security," he says. "The rumor is that the Bush administration, which had been pushing for something called private accounts -– people being able to take some of their Social Security contributions and really put it in an account owned and run by them -- … will agree to drop that requirement. They will put that aside.

"In exchange, ... the new congressional leadership will agree to some technical changes that the Bush administration has also wanted in terms of changes in how future Social Security payments are indexed to go up over time," he adds. "In essence, they are going to change the inflation rate that’s used, which will if adopted save Social Security billions of dollars in the future and again put it at a much more solvent fiscal level.

"We’ll obviously have to see if this compromise that’s rumored does turn out," he concludes. "But if it does, this could be a major change to Social Security."

Posted by deeshore at December 27, 2006 07:58 AM