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Panel at odds on securing Social Security
July 29, 1996
Web posted at: 3:00 p.m. EDT
WASHINGTON (CNN) -- A report to Congress on how to keep Social Security from going broke is several months late because experts are deadlocked over three different proposals.
One of their concerns is that younger workers will not get their money's worth. New numbers from the government show why.
For older Americans, Social Security has been a bargain. Seniors have taken far more money out of the system than they put in.
But according to new calculations from Social Security, obtained by CNN, younger workers will be economic losers once they retire under the current system.
Unless taxes are raised, they will get back 20 percent to 30 percent less in benefits than the total of the taxes they paid plus interest.
"There are going to winners and there are going to be losers in the system," said Social Security Trustee Marilyn Moon.
Congress appointed an advisory council to figure out how to avoid that. But the council couldn't agree on a solution and will soon offer three completely different proposals.
Playing the stock market
The most dramatic plan calls for partial privatization. Workers could set aside about 40 percent of their Social Security taxes in a private account and invest them in the stock market.
"Over a period of years, it's almost doubling the real return, the return after you subtract out inflation," said Sylvester Schieber, a member of the Social Security Advisory Council, which was appointed to address the solvency of the government program.
An analysis by the Social Security Administration showed the privatization plan -- called "personal security accounts" -- would put more money in workers' pockets than other plans.
Workers born in the 1970s would get back one dollar in benefits for every dollar of taxes with interest. Those born in the 1980s would wind up getting $1.10. Under current benefits, they would get only 90 cents on the dollar.
Plan carries risks
But critics worry about workers putting their Social Security money into the stock market.
"If they invest poorly, and there isn't an adequate income for their retirement, what would we do with them? Will society turn its back? Or will we have to pay again? Will we pay twice?" asked Social Security Advisory Council member Tom Jones.
Jones wants the Social Security system itself, rather than individuals, to invest retirement funds in the stock market.
Already, the advisory council's report has been delayed for months, in part because critics think the numbers make privatization look better than it is and want them changed before the report goes to Congress.
That kind of bickering is to be expected when you're talking about the most sweeping changes in Social Security since the program began back in 1936.
Reporter Jim Angle contributed to this report.
Related story:
- Putting Social Security on Wall Street - February 16, 1996
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