Newspaper article The Christian Science Monitor
Barn Door Open on Privatization of Social Security
Nineteen ninety-seven may be remembered as the year Washington began a serious debate on one of the most fundamental issues of United States public policy: the federal government's role in ensuring retirement financial security.
The report of President Clinton's Advisory Council on Social Security, released yesterday, could be this argument's starting point. After two years of work, the 13-member panel couldn't agree on a single plan of action to shore up Social Security's shaky finances. It produced three, instead - but all three touch in some manner on the sensitive question of Social Security privatization.
Should some portion of Social Security tax revenue be invested in the stock market, and its potentially higher returns? Should individuals have greater say in the management of their Social Security retirement assets? Or would such changes leave too many Americans without adequate funds for retirement? Edward Gramlich, chairman of the panel and director of the University of Michigan's Institute of Public Policy Studies, says he sees today's study as "initiating a political debate" on such difficult questions. Close observers of the Social Security system have long known that such a discussion is looming. The basic problem is well known: As large numbers of baby boomers reach retirement age in coming decades, the federal system will find itself hard-pressed to pay their promised retirement benefits. Right now Social Security is running a surplus. But by 2029, projections are that the program will be taking in tax revenue equal to only about 75 percent of the money it needs to pay out in benefits. During last fall's political campaign, there was much talk of appointing a bipartisan commission to tackle this issue. This came as news to Dr. Gramlich and other members of the existing panel, who felt they were already fulfilling such a role. Unable to reach a consensus, the commission finally developed three alternative rescue plans. All, in their own way, would represent historic change in the system. (It's also important to note that retirees already drawing Social Security would be unaffected by almost all of these changes.) The commission's Option 1 would generally maintain today's benefit structure. …