Saturday, November 10, 2007

More reasons to love Fred

From The Washington Post:

Republican presidential candidate Fred Thompson yesterday proposed slowing the growth of Social Security benefits and creating voluntary, government-matched savings accounts, becoming the first candidate of either party to offer a detailed proposal to fix the nation's retirement system.

Thompson's plan draws on ideas favored by conservatives: a reduction in benefits, rather than an increase in payroll taxes; and a shift toward private accounts, rather than government-provided payments. As a result, the proposal drew immediate criticism from liberals, who said it would severely reduce Social Security benefits, especially for low-income older Americans who rely most heavily upon them once they reach retirement.

Under Thompson's plan, Americans would be offered the option of contributing an extra 2 percent of their salaries to a retirement savings account. As with many corporate 401(k) plans, the government would contribute $2.50 for every dollar that an individual saved, up to a maximum of $12,000 per year.

To pay for the savings accounts and to help keep Social Security solvent, Thompson would change the way benefits are calculated. Over the next 50 years, benefits would grow much more slowly under Thompson's proposal than in the current system.

Those who are now nearing retirement would be exempted from Thompson's formula. But Thompson argued yesterday that even by requiring an increase in the retirement age to receive full benefits, people will be better off with the combination of reduced Social Security payments and money from their savings accounts.

"There's an awful lot of people out there who depend on Social Security for all or part of their income," Thompson told reporters. "It is unsustainable as presently constituted, and everybody knows it."

Fred is to be praised not only for coming up with a very good idea but for having the enormous courage to touch the "third rail" of Social Security. The system will collapse and if steps aren't taken now the results of that collapse have the potential to be devastating.

This must be another example of Fred's intention to run for president "his way".