Perspectives on the President's
Commission to Strengthen Social
Andrew G. Biggs
In May 2001 President Bush appointed the President's Commission to Strengthen Social Security to formulate proposals that would maintain Social Security's promise for today's retirees while improving that promise for younger workers through personal accounts. That was their task, and in the end they accomplished it well.
The commission began its work with an interim report, issued in August 2001, outlining the state of the current program. The interim report generated significant controversy—particularly its criticism of the Social Security trust fund and the overall progressivity of the program.
The commission's final report and recommendations, delivered to the president in December 2001, contains three separate reform proposals based on personal retirement accounts. Although the plans encompass a broad range of ideas on how to maintain Social Security, each would pay benefits at least as high as the current program at a lower long-term cost, while giving workers the opportunity to build assets and wealth in personal accounts that they would own and control.
The commission's Plan 1 would do nothing more than give workers the option to voluntarily invest a portion of their Social Security payroll taxes in a personal retirement account. Because it makes no other changes to the system, it is politically attractive in the short term, but it does not address long-term concerns. Nevertheless, even this “accounts only” approach would pay higher benefits to all retirees while reducing long-term general revenue costs by 8 percent compared with the current program.
Originally published as Cato Institute Social Security Paper no. 27, August 22, 2002, and updated to reflect current information.