If At First You Don't Succeed…

Via Brad DeLong comes this report from Jason Furman of the Center on Budget and Policy Priorities on Bush's proposal to "progressively index" Social Security benefits in order to restore full solvency to the system. Here's what Furman finds:

Because the sliding-scale benefit reductions (also called “progressive price indexing”) that the President has proposed would not start until 2012 and would be small initially, this proposal would move back the date when Social Security’s benefit costs will first exceed its tax revenues by only two months, to slightly later in 2017.

The sliding-scale benefit reductions would have a somewhat larger effect on the date when Social Security would become insolvent — the benefit reductions would move that date back by six years, from 2041 to 2047.

The President’s private accounts, however, would accelerate the date on which Social Security begins to have a cash-flow deficit, as well as the date of insolvency, because establishing the accounts requires diverting large sums from Social Security to the accounts. When the sliding-scale benefit reductions and the private accounts are considered together (i.e., when both components of the President’s plan are examined), the plan is found to move forward the year in which Social Security would become insolvent from 2041 to 2030. This result could be averted only by large cash transfers from the Treasury or additional benefit reductions or tax increases. The plan also would accelerate the year in which the program begins to run cash-flow deficits from 2017 to 2011.

And the bottom line:

When the private accounts are added in, however, the President’s plan as a whole is found to close only 30 percent of the 75-year gap. More than two-thirds of the gap would remain. Additional benefit reductions, new revenues, or large transfers from the rest of the budget would be necessary to fill the substantial remaining gap.

Given that Bush's "plan" doesn't fix the problem he says it does, then what's the point of putting it out there? My feeling is that we should look at progressive indexing with private accounts as phase one of the larger effort to kill the program completely. Bush & Co. will trot out their own experts who will contradict the critics, and the truth will get lost in the mess of he-said-she-said reporting we've gotten so used to seeing. But years down the road, when the critics have been proven correct, we'll hear something like "well, in for a penny, in for a pound" from the conservatives, and the push will be on to fully privatize Social Security. The failure of Bush's ill-conceived "reform" will be turned into a structural failure of Social Security itself, and with deep regret we'll be told again that private accounts are the only way to salvage even some of the benefits we worked hard to earn.