Three camps have emerged in the debate over Social Security's future: the "partial privatizers," who would use personal investment accounts to ease the pain of benefit cuts; the "balancers," who would use benefit cuts and tax increases in equal measure; and the "tinkerers," who would use an array of tweaks to improve the system's solvency without fundamental changes.
The Partial Privatizers: President Bush's Social Security Commission Plan 2.
• Allow workers to divert 4 percentage points of their 12.4 percent payroll tax, up to $1,000 a year, into a personal investment account.
• Initial benefits would rise with the consumer-price index, not the rise of wages that now sets benefit levels. A retiree in 2032 would see scheduled benefits cut 18.2 percent. A retiree in 2052 would have promised benefits cut 32.5 percent.
• Guaranteed benefits would be cut back further by the amount contributed to personal accounts.
• Long-term low-wage workers would be guaranteed a minimum benefit of 120 percent of the poverty line.
The Balancers: Plan Drafted by Democratic Economists Peter A. Diamond and Peter R. Orszag.
• Gradually increase payroll tax to 12.7 percent in 20 years, 13.2 percent in 30 years and 13.7 percent in 40 years.
• Apply 3 percent surtax to incomes above the Social Security tax cap, currently around $90,000.
• Trim benefits from promised levels, by 3.7 percent for a retiree in 2032 and 12 percent for a retiree in 2052.
The Tinkerers: Former Social Security Commissioner Robert M. Ball's Plan.
• Adjust standard inflation measure to slow the annual cost-of-living adjustment.
• Raise the portion of taxable wages from 85 percent of national payroll to 90 percent.
• Include all newly hired state and local government employees in the Social Security system and begin taxing their wages.
• Devote an inheritance tax on estates worth at least $3.5 million to Social Security.
