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Washington - President Bush is continuing to showcase his plan to privatize Social Security, claiming that workers would do far better investing in the stock market than they would under the current system. That is simply not true. While Social Security is largely viewed as a program that affects older workers and retirees, the president's proposals would actually have the largest negative impact on today's youngest workers. Privatizing Social Security would result in drastic benefit cuts for young workers and would saddle that generation with enormous debt.
The guaranteed retirement benefit Social Security offers is needed more than ever in today's economy. Few corporations offer traditional pension plans anymore and those that do are scaling back benefits. If today's workers are lucky enough to have any retirement plan, it's a 401(k) account, subject to the ups and downs of the stock market, as former Enron employees can surely attest. Social Security is the only guaranteed retirement income on which most of today's workers can depend.
For 70 years, Social Security has provided a guaranteed, monthly benefit to retirees, disabled workers, and survivors of deceased workers. Social Security, the most popular and successful government program in U.S. history, has acted as a financial safety net for Americans. It was never designed to make anyone rich. Rather, it's an insurance program that guarantees a decent level of income. Unlike a 401(k) plan, it will last as long as you live and its benefits will increase every year.
President Bush's plan destroys that guaranteed safety net and replaces it with a risky, private investment scheme that is filled with deep benefit cuts and huge government fees. With the president's plan, you could choose to stay in the current system or opt into the privatized system, but it's not much of a choice. Either way, your benefits will be cut.
The president has done a remarkable job of convincing some of today's young workers that Social Security will not be there for them when they retire, and offers privatization as his solution. But when you look at the numbers it is clear that privatization doesn't make sense. Privatization does nothing to address the need to strengthen the Social Security Trust Fund to pay for the Baby Boomers who are poised to enter the system in the coming years. Younger workers would be forced to pay for the president's privatization plan twice: once when they are handed the deepest benefit cuts of any current workers, and again when they must deal with the consequences of the federal government's exploded debt.
The government would need to borrow nearly $5 trillion over the first 20 years of the privatized program, with trillions more needed in future years. All of this debt means much higher long-term interest rates, significantly greater interest payments on the national debt, which is already at a record high, and the overall inability of government to provide the services that the public expects and needs unless taxes are raised. Today's younger workers would be forced to pay for and deal with all of this.
Social Security is a remarkable success that must be protected. While the program needs to be strengthened to ensure that full benefits are always paid to beneficiaries, privatizing Social Security would be a poison pill. Younger workers need to know that they can depend on Social Security to be there for them when they retire, something that cannot be guaranteed to them if Social Security is privatized. Congress must examine the issue and find the best way to protect this outstanding program, not outsource it to private investment firms. That is the only way that today's newest generation of workers will have faith in the durability of Social Security and enjoy the program's full benefits. |
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