The President’s Commission to StrengthenSocial Security was appointed in May 2001to formulate proposals that would protect benefits for today’s retirees; enhance Social Security’s fiscal sustainability for the long term; and give younger workers the opportunity to invest part of their payroll taxes in personal retirement accounts that they would own, control, and be able to pass on to their children. The commission’sthree reform proposals, delivered to thepresident in December, fulfill those obligations.
The commission’s interim report, issued inAugust 2001, cast doubt on the current system’strust fund financing and questioned the program’sprogressivity. Those findings generatedconsiderable public controversy. The commission’sfinal report, which put forward three distinctplans to strengthen Social Security throughpersonal accounts, generated even more debate.
Although the commission’s three plans covera spectrum of approaches, the proposals haveimportant characteristics in common. All threeplans would provide higher benefits than the currentsystem can pay, and lower-income workers -- who opponents of private accounts claim tobe most concerned about -- would receive higher benefits than are promised under the current system.Moreover, all three plans would producethose benefits at a cost lower than that of maintainingthe current program.
The commission attracted significant criticismfrom opponents of personal accounts.What the commission's work did not attractwas substantive counterproposals on how tokeep Social Security solvent and sustainableover the long term in the absence of personalaccounts. The next stage of the Social Securitydebate is for account opponents to put their ownproposals on the table. Inaction, the "policy"most often put forward by opponents, is not aviable option.
A review of the arguments and evidence findsthat the personal account-based proposals fromthe President's Commission provide a better wayto pre-fund future Social Security benefits thanthe current program's trust fund mechanism; thatprotections against poverty in old age would beincreased and progressivity enhanced; that workerswould have the right to own, control, andpass on their Social Security savings; and thatpersonal account-based proposals have thecapacity to pay higher benefits at lower long-runcosts than the traditional pay-as-you-go methodof financing Social Security.