News Release

February 13, 2002

Lieberman's "Enron-Inspired" Turn Against Social Security Reform Unfounded, Cato Experts Say

WASHINGTON--As Senator Joe Lieberman today joined a number of politicians alleging a connection between Social Security reform through personal retirement accounts and the case-specific failure of Enron's private pension accounts, Cato Institute Social Security policy experts again caution reform skeptics to review the facts. Personal retirement accounts, as outlined by the President's Commission to Strengthen Social Security, are specifically designed to ensure broad diversification and avoid Enron-type scenarios.

Senator Lieberman previously supported personal accounts to reform Social Security. Quoted in a May 4, 1998 Cox News Service interview, Lieberman said, "If we can manage the transition, we have a chance to not only do something right, but to give people more confidence about what their retirement years would be like. Of course, it also dramatically increases our savings rate, which has to be good for our economy overall. Not everybody supports this. We're going to see again a kind of old Democratic Party/new Democratic Party kind of split on this. I think in the end that individual control of part of the retirement/Social Security funds has to happen."

In response to Senator Lieberman's statement today implying a "direct connection between what happened in Houston and what could happen across America" if Social Security were partially privatized, Michael Tanner, director of the Cato Institute Project on Social Security Privatization, said:

"Enron pension accounts and private Social Security accounts are not the same. If Senator Lieberman believes that Enron means private investing is just too risky, he would be advising Americans to abandon their 401(k)s and other investments. That would be an unfortunate turn of events for the American people.

"Reform remains an absolute necessity to secure Social Security's future. Personal retirement accounts remain America's best alternative to save the system. Trying to drag Enron into the Social Security debate shows just how few arguments opponents of privatization really have."