Pro vs Con

Conservatives opposed Social Security from the time it was conceived by President Franklin D. Roosevelt during the Great Depression. Their continued disdain for the program was vividly displayed in a memo by Peter Wehner, President Bush's director of strategic initiatives and an aide to Bush advisor Karl Rove, who wrote, "For the first time in six decades, the Social Security battle is one we can win."

Social Security is efficient - costing less than 1 percent per dollar in administrative costs. There is simply no comparison between Social Security and the 12 to 14 percent fees of private insurers charge. Nearly two-thirds of retirees count on Social Security for most of their retirement income and Social Security works because nearly all American workers pay in to the system and earn a benefit that is guaranteed by the full faith and credit of the U.S. government. Privatization turns that guarantee into a gamble. Nearly all Americans would see cuts to their guaranteed benefit, hitting hardest on the middle class. And if an individual chooses an individual account, their guaranteed benefit is cut even more.

The privatization plan President Bush proposed would force mandatory cuts in guaranteed benefits for nearly all Americans. Middle-class Americans will be hit the hardest by the president’s plan – seeing cuts to their guaranteed benefits of about 30 percent whether or not they choose a private account. But workers who choose a private account would see larger cuts to their guaranteed benefits – of around 66 percent, according to the nonpartisan Center for Budget and Policy Priorities.

How does it work? Under the president’s privatization plan, the government would actually cut your guaranteed benefit based on the amount you put in to your private account (not based on the amount you earn in your account). If you are lucky, your account would earn enough money to cover that cut to your guaranteed benefit. If you aren’t so lucky, you would face a cut to your guaranteed benefit AND could still owe the government more money back.

The ownership society says you are on your own. In fact, when it comes to Social Security, we’re in it together. Workers support their parents’ generation and are in turn supported by their children’s generation. The new economy places ever-increasing risk on workers – less job security and fewer guaranteed pensions. Social security provides a secure floor – we cannot put that at risk as well.

The economy hasn’t changed so much that corporations should cheat their employees by walking away from their obligations. Corporations need to honor the commitments they made and fund their pension plans. You never hear about corporate executives losing their pensions. Workers deserve the same protection that executives give themselves.

Social Security is in surplus now and faces no problems for four decades. Any long-term projected shortfall can be eliminated simply by requiring everyone to pay payroll taxes on their entire income. The winners under privatization will be Wall Street brokers showered with management fees. For seniors, privatization will simply increase individual risk and leave more people in poverty.