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It has been nearly one year since the 1994-1996 Advisory Council on Social Security issued its report on the impending collapse of the American Social Security system. Even if it wasn't clear to them before, anyone who carefully examines the issue now knows that drastic reform measures must be taken soon. According to a Public Opinion Strategies poll sponsored by the Cato Institute, "fully 60% of Americans under age 65 believe Social Security will not be available for them when they retire."
It has been a hotly debated topic this year. People on all sides of the issue have weighed in with their recommendations. Most of them are centered on one of three basic proposals:
The critics of privatization charge that it would be dangerously dependent on the market. There would be no safety net if there was a depression. Even under normal market conditions, rates of return would go down significantly after a massive influx of cash from privatization. At best, they argue, a private system will only benefit the rich, and at worst, it will harm everyone.
The Cato Institute has been at the forefront in countering the anti-capitalist fallacies in the privatization debate. Cato has teamed up with the "Big Six" (Four) accounting firm KPMG Peat Marwick to offer an interactive Java-based Social Security Privatization Calculator. You can use the calculator to estimate what your returns will be under the current Social Security system, and what they would be if your money was privately invested.
Around the world, changes are happening. In 1981, Dr. José Piñera led a successful implementation of a private pension system in Chile. Australia, Argentina, Bolivia, Colombia, El Salvador, New Zealand, Peru, Singapore, and Uruguay have all followed suit in some way. Mexican workers will be depositing their payroll taxes directly into private accounts starting July 1, 1998.
Dr. Piñera is traveling the U.S. and the world preaching the gospel of privatization. Less than a year after a visit sponsored by the Cascade Policy Institute, the state of Oregon passed a resolution seeking permission from the federal government to allow the state to create a replacement for the Social Security system for its citizens.
This month, Cato is sponsoring a conference in London with The Economist on the Solving the Global Public Pension Crisis: Opportunities for Privatization.
Early this year, our Policy Spotlight looked at The Trouble with Social Security. Obviously, the issue has been developing at a rapid pace. Below you will find dozens of the most important recent commentaries and reports. For earlier materials, please refer to the January 1997 issue.
Don't miss J.D. Tuccille's examination of the mass media treatment of the topic in this month's Media Spotlight "It's He-e-e-re." Please post your own questions and comments in the Spotlight Discussion Forum.
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Cato Institute / Project on Social Security Privatization
Cato has been working on Social Security reform for more than a decade. Their Project on Social Security Privatization has been very active in promoting alternatives to government-run pension systems around the world.
Recent papers released by the project include:
This past summer, Stephen Moore, Cato's director of fiscal policy studies, testified before the House Social Security Subcomittee on The Future of Social Security for this Generation and the Next. Dr. José Piñera testified before the Senate Banking Committee on Empowering People.
Michael Tanner, Cato's director of health and welfare studies, has recently published two commentaries on the future of the Social Security system, Social Security Reform: The Clock is Ticking argues that we shouldn't miss the window of opportunity to fix the system. When Social Security turned 62 this past August, Tanner asked if it was Time for Retirement?
Additional resources can be found at the SocialSecurity.Org page:
Thanks to Cascade, on May 5, 1997, the Oregon legislature passed Senate Concurrent Resolution 2. This resolution urges Congress to amend the Social Security Act to allow waivers to be issued so that states can implement alternative retirement plans.
A complete analysis of the issue is available in The New Oregon Option: Opting Out of Social Security. Paul Farago offers an excellent analysis of why states should support this proposal for the benefit of their citizens in a paper entitled Should States Opt Out of Social Security? and in a speech entitled Why States Should Pass the Social Security Opt Out Resolution, given at the American Legislative Exchange Council's December 1997 conference.
Additional information, editorials and news clippings can be found on their Social Security Privatization in Oregon page.
Reason is the premier libertarian magazine and offers one of the best Web sites for free-market commentary and investigative reports.
In March, Reason's David Henderson reviewed "Will America Grow Up Before It Grows Old?" by former Commerce Secretary Peter G. Peterson. Henderson discusses the pros and cons of Peterson's analysis and recommendations.
In Clash of the Titans, Carolyn Lochhead shows the extent of the opposition from the New Dealers to reform of the system.
Heartland is dedicated to getting public policy research into the hands of elected officials across the country. They are currently distributing nearly 10,000 copies of Robert J. Genetski's "A Nation of Millionaires: Unleashing America's Economic Potential" to every member of Congress and every state legislator in the country.
Many other groups have done research on this topic. Below are some highlights.
National Center for Policy Analysis
John Goodman, president of the libertarian-conservative NCPA, testified before the House Social Security Subcommittee this summer on The Need for Radical Reform.
On December 3, Bruce Bartlett contributed an editorial on how Social Security Problems are Accelerating. NCPA has an extensive collection of other op-ed pieces, articles, and links in their NCPA Policy Library.
International Center for Pension Reform
The center is led by Dr. Piñera. It offers a number of reports on efforts underway around the world to privatize government-run social security systems:
Many of these and other studies are available in languages including Spanish, French, German, Chinese, Turkish, Dutch, Norwegian, Portuguese, Romanian, and Swedish.
In the April issue of LP News, Jacob Hornberger wrote an essay entitled Should Libertarians save Social Security? He discusses the options that Libertarians have to save or scrap the system.
Social Security Reform has also been spotlighted in the Talking Points section of LP News:
PPI is associated with the Democratic Leadership Council, and is widely credited with helping to elect Bill Clinton as a "New Democrat." PPI published a piece by Robert Shapiro entitled A New Deal On Social Security. Shapiro argues that a two-tiered approach would promote personal responsibility and self-reliance.
The mainstream Concord Coalition was founded by former senators Paul Tsongas and Warren Rudman to fight budget deficits and the national debt, as well as ensure "Social Security, Medicare, and Medicaid are secure for all generations." As part of its Facing Facts series, Concord published the following commentaries on the current system and its impending collapse:
ATR fights for many free-market reforms. ATR's Peter J. Ferrara has put together a comprehensive analysis of the social security problem with strong points to defend his recommendations in Power to the People: A Private Option for Social Security.
ATR president Grover Norquist chatted with Townhall members on Social Security Reform and promoted the Quick Crunch Benefit Calculator that is part of the ATR site.
An excellent discussion of pension reform in Britain can be found in Social Security Privatization in Britain: Key Lessons for America's Reformers and The Policy and Political Lessons of Britain's Success in Privatizing Social Security. Heritage president, Edwin Feulner, weighs in on this issue with Somebody Fixed Social Security?.
Daniel Mitchell, senior fellow in political economy, has authored a detailed report on Creating a Better Social Security System for America. It is backed up with a hefty amount of graphs and figures to support his arguments.
Do you wonder what would really happen if you could opt out of the current system? Find out why Mrs. Colehill Thanks God for Private Social Security and hear about a real example.
Some additional resources include:
Americans for Hope Growth and Opportunity
As part of Steve Forbes new commitment to "strengthen families and expand economic growth and opportunity," AHGO has made Social Security Reform an important issue. A New Social Security System outlines one proposed piece of legislation by Rep. Nick Smith called the Social Security Solvency Act.
Results from several public opinion polls are available from AHGO, as well as an analysis of the current payroll tax deductions.
Other Townhall Member Organizations
The
Ponzi's Revenge from the National Review discusses the opposition to privatization.
Malcolm Wallop of the Frontiers of Freedom Institute also weighs in on The Privatization of Social Security.
Social Security Administration
Other Links
In December 2004 this page was modified significantly from its original form for archiving purposes.
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