In dueling memos, House Majority Leader Dick Armey (R-TX) and Rep. Robert Matsui (D-CA) recently laid out what will likely be the two sides of the debate over Social Security privatization. In this first clash, at least, Armey appears to have the upper hand.
In a memo to House Republicans, Armey warns that Social Security faces an "unavoidable crisis" and makes several important points, among them:
- Social Security currently faces an unfunded liability of nearly $22 trillion, an amount equal to:
3 times the current GDP
7 times the current national debt
11 times this year's federal budget
75 times the size of this year's defense budget
750 times the size of this year's education budget
Armey concludes that only personal accounts create sustainable solvency, increase real rates-of-return, create assets than can be passed on to one's heirs, and make it possible to reduce payroll taxes over time.