Privatizing Social Security Won't Save It

Privatizing Social Security Won't Save It
April 9, 2005

Washington, DC - Contrary to what President Bush and many Republicans in Congress have been saying, Social Security is not facing a crisis. The program does, however, face a challenge several decades down the line of paying full retirement and disability benefits. That challenge of maintaining full benefits for all current and future Social Security recipients must be Congress' number one priority for Social Security reform. Unfortunately, President Bush and his allies in Congress have been touting privatization as their idea of Social Security reform. Privatization is a dangerous and risky idea, and most of all it does nothing to ensure Social Security's solvency. In fact, privatization accelerates the timeframe in which Social Security would stop paying full benefits. That's why I am vehemently fighting any attempts to privatize Social Security and doing everything I can to strengthen and make this extraordinarily successful program permanently solvent.

If Social Security were left alone, it would have enough money to pay full benefits at least until 2041, and 73 percent of benefits after that, according to conservative estimates from the Social Security Actuaries. The nonpartisan Congressional Budget Office (CBO) says Social Security can pay full benefits until 2052, and 78 percent of benefits thereafter. So when we're talking about a problem that doesn't kick in for another 36 to 47 years, labeling it an imminent crisis is wrong and misleading.

Social Security may, however, become a crisis if President Bush and his congressional allies get their way with privatization. Private accounts would drain nearly $5 trillion from the Social Security Trust Fund over the first 20 years of the new program. By doing so, the Actuaries estimate that Social Security would stop paying full benefits in 2031 -- 11 years earlier than it would if the program was left untouched. Additionally, privatizing Social Security would require dipping into the program's trust fund in 2012 instead of 2018 to pay benefits. It's clear from these statistics that privatization does nothing to fix Social Security and ensure its long-term solvency, but instead puts it on a crash course to destruction. On top of all this, privatizing Social Security would lead to cuts in guaranteed benefits of more than 40 percent. Even those who don't buy into the president's private system would suffer those cuts.

What's ironic is that President Bush now readily admits that privatizing Social Security doesn't address the problem of solvency. In fact, last month the president was quoted as saying, "Personal accounts [privatized accounts] do not solve the issue...I repeat: Personal accounts do not permanently fix the solution." This obviously begs the question of why then are President Bush and many Republicans calling for a privatized Social Security program if it does nothing to improve the current system. The answer is that Social Security is a government program that runs contrary to Republicans' conservative ideology and that privatizing the system is really a front for them to dismantle the entire program.

When first campaigning for the presidency, then-Governor Bush said that transitioning from the current system to private accounts would lead to "completely different worlds." Over the past few months, I've held several town hall meetings on Social Security and one thing I've heard over and over from my constituents is they don't want a "different world" when it comes to Social Security. They want to protect the current Social Security system and strengthen it so that the program always pays full benefits.

So how do we ensure Social Security's long-term solvency? Any solution certainly doesn't include privatizing the system and taking $5 trillion from the program's trust fund. The first step towards strengthening Social Security is returning to fiscal discipline. Additional steps are needed, but we must remember that Social Security is facing a long-term challenge, not a crisis, so we can afford to take some time to find the best solution. In doing so, we will ensure that this and all future generations will always receive full Social Security benefits. One thing is for sure: the right solution will not include privatization.

http://www.house.gov/apps/list/speech/ny22_hinchey/040905ssoped_privatizingwontsave.html