Commentary

Representative McCarthy Would Have Benefited

By Carrie Lips
August 25, 1998

The professed reason several female Democratic representatives held a Capitol Hill press conference on August 6th was to emphasize the need to study the effects of Social Security reform on women. They said over and over that they didn’t intend to recommend a policy or even take a position on reform proposals. But most of them were quick to seize the opportunity to badmouth “privatization,” claiming that any reform that allows individuals to invest a portion of their payroll taxes would pose great danger for women.

It is typical that these “pro-women” legislators lament the unfairness of a society that fails to treat women as equals while using women’s alleged incompetence as investors as a reason to oppose reform.

Perhaps most surprising, however, was the personal anecdote told by Rep. Carolyn McCarthy (D-N.Y.). Tragically, in 1993, Representative McCarthy’s husband was killed in the Long Island Rail Road massacre. Representative McCarthy told how that devastating loss was made worse: the McCarthys had only $5,000 in savings. She had to find a way to support herself.


It is typical that…”pro-women” legislators lament the unfairness of a society that fails to treat women as equals while using women’s alleged incompetence as investors as a reason to oppose reform.


Representative McCarthy unintentionally highlighted an instance in which a woman — herself — would have been far better off under a system of personal retirement accounts. Her story is not the exception: according to a recent study published by the Cato Institute, nearly all women — whether married, single, divorced or widowed and of all income levels — would be better off under a system of personal retirement accounts. By taking advantage of the power of compound interest, the overwhelming majority of women could expect to receive considerably higher benefits than they can under the current pay-as-you-go system.

It is certainly important that legislators and academics consider how changes in the law affect women. Earnings sharing (whereby contributions are split equally between husband and wife) should be part of individual investment proposals in order to protect women from a loss of income due to divorce. A minimum safety net should also be provided. Most important, however, women must be regarded as individuals and equal partners who need to face the reality of a crumbling federal retirement program that threatens the financial well-being of their children’s generation.

Instead of focusing on stereotypes of women as incompetent investors and natural dependents of the state, female Democratic legislators should welcome the opportunity to give women the benefits of personal retirement accounts. This system would allow families to own their retirement savings, free our nation’s children from a growing entitlement debt and, most important, empower individuals by treating them all as equals. Isn’t that what feminism is supposed to be all about?

Carrie Lips is project assistant for the Cato Institute’s Project on Social Security Privatization.