Four percent? Four percent?

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The NYT Bush's proposal for Social Security. Here's the paragraph that baffles me:
Calling Social Security "a symbol of the trust between generations," the president said the system needed to be retooled for the needs of a very different era. He called for the gradual creation of personal retirement accounts, into which younger workers could eventually divert up to 4 percent of their payroll taxes.

"We will make sure the money can only go into a conservative mix of bonds and stock funds," Mr. Bush said. "We will make sure that your earnings are not eaten up by hidden Wall Street fees."

Am I missing something here? Four percent of payroll taxes? I was expecting more like 50%. I haven't been tracking this that closely but can someone explain why this is a big deal?

UPDATE: Chris Walsh and Bob McGrew point out that this is 4 percentage points out of the 6% contribution employees make. That's a big difference. Am I the only one who thinks that the original article could have been written better?

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He means 4 percent of the 6 and some percent currently deducted (13 percent if you, correctly, include the employer's share).

He means 4 percentage points. That's a big difference.

No, its deliberate manipulation on the part of administration that the press is going along with. By saying its "Only 4 percent", it doesn't sound like a big cut in revenue, rather than being a 33% cut in social security revenues: blowing a massive hole in the budget.

So they say "You get to keep 1-2 thousand of yoru money" and "It's only a 4% cut in revenue"...

1) It's your money, except --

  1. Only 2/3-rds (or 1/3-rd)of it is inventable.
  2. Only in safe investments.
  3. Only for retirement.
  4. Only after it is phased it in to ensure that the budget impact does not look too large in the early years.
  5. Only after the department that scores it perhaps under-estimates it by 33% (as they did for the Medicare Drug situation)

2) And after all, it will not effect the current retiree's except that when it really takes effect it means that 1/3-rd less money is available to pay for their SS.

So the proposal is to replace a system that is basically in balence and works if the country grows at average levels, with one were their is only 2/3-rds as much money to pay for the people whose "benefits will not be cut"!!! and of course cuts the distant future benefits by 40% (or so) while allowing money to be "invested" in the stock market.

Note: As pointed out over on Talking Points "I guess they call it fact-checking ..." .. The system is working as was expected.

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