Attacks

REPRESENTATIVE MATSUI: "[W]e continue to hear proposals from those who would replace the [Social Security] program's guaranteed benefits with a privatized system of stock market accounts. Privatization would . . . put the one defined-benefit retirement program left for most Americans in the hands of a volatile stock market. The recent market downturn and string of corporate scandals has demonstrated just how important it is to maintain one component of retirement income as a guaranteed benefit that all Americans can count on." (Congressman Matsui, Press Release, August 14, 2002)

SENATOR CORZINE: "The huge volatility in the stock market over the past several months should make clear to all Americans that equity investments by their nature cannot offer the same security that Social Security provides." (Senator Corzine, Congressional Record, July 26, 2002)

Reality

The Greatest Risk Is Not Personal Accounts, It’s Leaving The Existing System In Place. “The fact is that the existing system places future beneficiaries at greatest risk because Social Security does not have enough money to pay scheduled benefits without a substantial tax increase. Giving workers the opportunity, but not the obligation, to invest a small fraction of their contributions into a personal account provides an important element of diversification – the key to minimizing overall risk to an individual’s retirement security.” (“Six Myths About Strengthening Social Security,” White House Talking Points)

Even A Risk-Averse Portfolio Would Earn Significantly More Than Current Social Security Benefits Provide. “An average-income, 30-year-old two-earner couple earns only the equivalent of about 1.23 percent (after inflation) on their Social Security retirement taxes. The same couple could earn a 5 percent rate of return by investing their taxes in a conservative portfolio of 50 percent super-safe U.S. Treasury bonds and 50 percent stock index funds. This is four times higher than the rate of return they currently receive . . . .” (David C. John, “Social Security: Improving Retirement Income,” Issues 2002, The Heritage Foundation, 2002, p. 81)

The President’s Plan Does Not Require Individuals To Invest Their Personal Account Funds In The Stock Market. “Workers demanding absolute security can, through personal accounts, have risk substantially below that of the current system simply by choosing to invest in government bonds.” Government bonds would not only provide higher return than the current Social Security system, they are also quite stable and risk-averse. In addition, none of the Commission’s proposals allow individuals to place their entire Social Security savings in the stock market. (“Strengthening Social Security And Creating Personal Wealth For All Americans,” The President’s Commission On Strengthening Social Security, December 21, 2001; “Six Myths About Strengthening Social Security,” White House Talking Points)