While proposals for Social Security choice have been much
debated, there has been far less discussion of the alternatives. Indeed,
opponents of individual accounts often critique these proposals as
if those reforms existed in a vacuum. They compare individual
account proposals with “current law” and suggest that those propos-
als will provide lower benefits, or at least lower government-pro-
vided benefits. Or they suggest that the costs of transition to a private
investment-based system will require tax increases.

But as Charles Blahous, executive director of the President's Com-
mission to Strengthen Social Security, has pointed out, “The essential
problem with comparing reform plans with ‘current law’ is that
‘current law’ allows the system to go bankrupt.” ¹

Impending bankruptcy is not the only problem facing Social Secu-
rity. Payroll taxes are already so high that younger workers will
receive an extraordinarily poor rate of return. In addition, Social
Security contains a host of inequities that penalize working women,
minorities, and low-income workers.

Most critics of Social Security choice focus only on insolvency.
They implicitly assume that the structure of the current program
is fine and changes are needed only in the program's financing.
Therefore, the solutions they offer generally do not deal with estab-
lishing property rights, making benefits fairer to women or minorit-
ies, allowing low-wage workers to accumulate wealth, or even
increasing rates of return.

Yet, even judging by their own limited standards, opponents of
Social Security choice offer few concrete proposals.

Originally published as Cato Institute Social Security Paper no. 24, January 29, 2002,
and updated to reflect current information.

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