I’ve read some work by Jason Furman, a liberal economist at the Brookings Institution, and think highly of him. But I don’t get his criticism of Fred Thompson at all.
The main component of Thompson’s plan is to hold the growth of Social Security benefits to inflation. Furman
called Thompson’s proposal a departure from the promises that were made to workers when the Social Security system was created. He said the change in calculating benefits, by indexing the system based on prices rather than wages, would dramatically reduce the payments that elderly citizens would be guaranteed.
“Price indexing would represent a historic shift in Social Security, transforming it from a retirement program to an increasingly paltry safety-net program,” Furman said. “Price indexing would break the historic pact with senior citizens.”
Wage indexing, the status quo policy, started only in 1977. So getting rid of it would not break any promise made when the system was created. And usually it’s the Left that insists that Social Security isn’t a retirement program but a “social insurance” program, which is to say a safety-net program. If Social Security is a retirement program, then adding a personal-account feature to it, as Thompson would, makes sense. If it’s a safety-net program, then Thompson’s price indexing makes sense. If it’s a little of both, then taking both halves of Thompson’s plan makes sense. So I’d say Fred Thompson ends up looking pretty good here.