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Shortly after his election campaign last November, President Bush endorsed a plan that would freeze social security benefits and replace the current formula of wage indexing - which keeps benefits rising with productivity and real wage growth - with price indexing - and thus cause drastic cuts in benefits across the income scale.

Last week, President Bush endorsed Robert Pozen's proposal which would bring about substantial cuts in promised benefits through partial price indexing.  This would reduce guaranteed benefits to the middle- and high-income workers, who would see large cuts in their guaranteed benefits over time.

The chart below shows how the benefit cuts get deeper over time.  A worker with average earnings would face a benefit cut of 28% in 2075 and a higher-earnings worker would face a benefit cut of 42%. As a result of these cuts, Social Security would no longer serve as a public pension plan and would rapidly become simply an anti-poverty program.

For many young workers today in their late twenties who retire around the year 2045, they will fare far worse under this partial price indexing scheme.

By 2075, the current relationship between lifetime earnings and Social Security benefits would erode to the point all workers would receive about the same benefit.  And as this erosion of benefits takes place, support for the program over time will weaken and fundamentally change Social Security from a dependable, guaranteed retirement benefit to a bare-bones safety net program.