News Release

July 22, 2004

Media Contact: (202) 789-5200

Social Security bill 'puts people, not government, first'
The '6.2 Percent Solution' gives individuals control of their future

WASHINGTON -- Reps. Sam Johnson (R-Tex.), Pat Toomey (R-Penn.) and Jeff Flake (R-Ariz.) today introduced a Social Security reform bill that will allow younger workers to voluntarily invest half of their Social Security tax into individual accounts. The legislation is modeled after the Cato Institute's "The 6.2 Percent Solution: A Plan for Reforming Social Security," by Michael Tanner, director of Cato's Project on Social Security Choice. If it becomes law, the legislation would protect those already heavily invested in the current Social Security plan, while giving others the option of owning an individual account.

"The impressive thing about this bill is that it ties together all the essential parts of sound Social Security reform," says Cato Institute President Edward H. Crane. "It is easy to understand -- your share of the payroll tax is used to purchase real assets you own; the employer's share helps finance the transition. The `6.2 Percent Solution' creates accounts large enough to make a real difference. And, best of all, the Recognition Bonds immediately create personal accounts that Congress cannot tamper with."

Tanner says: "This is a realistic bill that recognizes that there is no free lunch. But it also shows that, while being fiscally responsible, it is still possible to build a better Social Security system that gives workers true ownership and control over their retirement assets.

"This bill would restore Social Security to long-term and sustainable solvency, and would do so at a cost less than that of simply propping up the existing program. Younger workers who choose the individual account option could receive retirement resources substantially higher than under traditional Social Security. At the same time, it would treat women and minorities more fairly, and allow low-income workers to accumulate real wealth. Most importantly, this is a proposal that would give workers ownership and control over their retirement income. It is plan that puts people, not government, first. It is a plan that is fiscally responsible, and protects future generations of workers and taxpayers."

Crane and Tanner are both available for additional comment on the bill and Social Security reform in general. Call Cato's media relations department at 202-789-5200 to schedule an interview.

The 6.2 Percent Solution: A Plan for Reforming Social Security