News Release

September 14, 2004

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Cost of Social Security reform distorted

WASHINGTON--Reports are circulating that President Bush's Social Security reform plan will cost as much as $2 trillion. Michael Tanner, director of the Cato Institute's Project on Social Security Choice, made the following comments on the true costs of Social Security reform:

"To say that President Bush's proposal for individual accounts in Social Security reform would cost $2 trillion is to seriously misunderstand the word 'cost.' Social Security currently faces unfunded liabilities of more than $26 trillion (nearly $12 trillion in present-value terms). Just because those costs are not carried on the government balance sheet does not make them any less real. The Bush proposal would actually reduce those costs. While it is true that short-term spending would increase, that should not be considered a new cost any more than it should be considered an additional cost if you pay off your credit card debt today."

For more: "'Shooting from the Hip' on Social Security Reform," by Cato Senior Fellow Jagadeesh Gokhale.