The Boyd Report "Personal Accounts: Preparation not Privatization"

The Boyd Report

"Personal Accounts: Preparation not Privatization"

By Congressman Allen Boyd

The Social Security system we have today is a result of Franklin Roosevelt's vision of economic security for all Americans, and it is this vision that we hope to continue by strengthening the Social Security system for our children and grandchildren. Returning the system to solvency requires difficult choices, but the choice that should not be difficult is the creation of personal accounts. Today's younger workers are cynical and uncertain about the Social Security benefits they will collect in 40 years and rightly so.

They realize that Social Security is on a financially troubled path, and they might not receive the Social Security benefits they have been promised upon retirement. We owe it to our children and grandchildren to preserve and sustain this vital program, and personal accounts will help us do just this.

Along with Congressman Jim Kolbe (R-AZ), I have cosponsored the Bipartisan Retirement Security Act to return the Social Security system to fiscal solvency. Reforming the Social Security program inevitably requires changes for younger generations, and introducing personal accounts will allow younger workers to compensate for the changes needed to make the Social Security program solvent into the next century.

Many who oppose reforming the Social Security program have falsely claimed that personal accounts would lead to the privatization of Social Security. I am not an advocate of privatizing Social Security, our nation's largest and most successful entitlement program. The Kolbe-Boyd bill does not privatize Social Security, but instead, allows every American the opportunity to control his or her own retirement through the creation of publicly-administered personal accounts.

While our bill does not make any changes to Social Security for near and current retirees, younger workers will see a change in benefits. In order to save the financial future of Social Security, these changes are necessary, which is why we've introduced personal accounts to compensate for the small reduction in benefits for younger workers. Personal accounts are a way to let workers recoup those reductions and likely earn even more for retirement than they could under today's system.

The alternatives to creating personal accounts are not appealing or sensible. First, we could simply deny that Social Security has a problem. Many opponents of reform have done just that, but we cannot close our eyes, ignore the problem, and hope it will go away. Social Security's financial shortfalls are real, and Congress must work together to enact reform.

Second, we could decide to do away with personal accounts altogether. With only three ways to reform Social Security-raise taxes, lower benefits, and invest Social Security funds-it is foolish to take investment out of the equation. If this is done, Congress will be forced to raise taxes, cut Social Security benefits or both. We cannot expect younger workers to pay higher taxes or take significant benefit cuts without any promise of a more secure retirement in return. However, with personal accounts, we can compensate for the fiscal restraint inherent in any Social Security reform.

Many are concerned about the risks involved with investing Social Security funds into personal accounts, and I understand this apprehension. For this reason, the Kolbe-Boyd proposal allows younger workers the choice to invest in safe government bonds, the exact same way current Social Security dollars are invested today. Under Kolbe-Boyd, the only difference is that these funds would be placed in an account bearing the worker's name. Our plan also guarantees low-income workers a minimum benefit higher than under current law, in addition to the assets they will accumulate in their personal accounts.

I firmly believe that Social Security should be the bedrock of Americans' retirement security, and personal accounts would strengthen that bedrock. Social Security is not an asset belonging to individuals. It is a government promise, and if left unchanged it will turn out to be an empty one. Personal accounts are a responsible step to keep this promise.

http://www.house.gov/boyd/pages/boyd_reports/br050304.htm