Privatized Social Security? The President Says Absolutely Not
Social Security is deeply embedded in American society as a safety net against poverty and homelessness for senior citizens and the disabled. Nearly 53 million Americans receive benefits or nine out of ten people aged 65 or older. Among elderly beneficiaries, 20% of married couples and 41% of unmarried individuals rely on Social Security for 90% of their income.
Government officials have been warning Americans that by 2037 Social Security’s retirement and disability assets will fund only about 78% of benefits. Politicians on both sides of the aisle, however, refuse to abandon their ideological stances in an attempt to fix the system.
Democrats oppose any cuts to benefits and are divided on whether to gradually increase the retirement age as was last done in 1983. Any hike in Social Security taxes, even on the wealthiest Americans, is anathema to Republicans.
President Obama has lambasted the Republicans for proposing that younger Americans have the option of privatizing Social Security. When President Bush tried to push that idea shortly after winning the 2004 election, it was met with a tepid response and he quietly shelved the proposal after just a few months. Even today, Republican leaders aren’t in full support of the notion.
Creating private accounts for Social Security is not a new idea. The U.K. and Chile pushed workers into personal investment accounts that led to poor investment choices and exploitation by brokers, ultimately sending more workers to the brink of poverty. Other critics worry that the volatility of the stock market is too great to ensure that most retirees will benefit from private accounts.
President Obama, however, has created a bipartisan commission to come up with recommendations on how to revive the troubled system and he has not yet ruled anything out, meaning that even some sort of public-private partnership may be a feasible option despite his professed vehement objections to it.
Apparently, some compromises are needed if Social Security is to survive. With both sides posturing and professing commitment to their principles, it will be interesting to see which side blinks first, if at all.