George W. Bush won plaudits during the recent election campaign for “starting a conversation” on Social Security. Unfortunately, the discussion thus far has been long on misleading rhetoric and short on hard facts. Bush suggests radically changing Social Security, transforming it from a social insurance program into an investment scheme. Under his proposal, a portion of workers’ contributions would be diverted out of the Social Security system and into individual investment accounts. Bush suggests that such a seismic shift in policy is called for because the current system is hurtling toward insolvency. Moreover, he asserts that under a partially privatized system workers would receive higher benefits. These statements are simply wrong:
- Social Security finances are sound. The “crisis” had been invented.
- Bush and other proponents of privatization greatly understate the costs of their proposed new system.
- Not only will many workers across the spectrum face a severe loss of income under Bush’s radically transformed system, but the disabled, lower-income earners, and most women will face the most severe cuts.