The Boskin commission recommended cuts of 1.1 percentage points. Not everyone agrees that the cut needs to be this large. But a temporary reduction of perhaps 0.5 percent in the index used for adjusting Social Security benefits might make sense as a temporary measure if certain modifications were made. Few would be able to avail themselves of this option. Most low earners prefer to spend their money now.
People can already save in tax-sheltered accounts, but few do so.
Social Security was designed to correct this myopia, forcing people to set aside funds to protect themselves from loss of income on retirement, disability or death of a breadwinner. Low earners who found the temptations of current income stronger than the desire to save for future contingencies would take the payroll tax cut Moynihan offers and eventually suffer cuts in Social Security benefits averaging roughly 30 percent. Employers also would have to keep track of each change of plan that every employee would be free to make. Workers would likely experience high administrative costs and might encounter some financial wrongdoing, if the experiences of Chile and Great Britain, whose systems Mr. Glassman extols, are any indication. The Chilean system is overrun by wasteful selling costs of approved plans.