The report states that growing numbers of retirees and fewer workers mean that by 2016 more benefits will be paid out than payroll taxes received. Because the Social Security Trust Fund "contains no real assets" the government must raise taxes, cut benefits or other spending, or borrow to pay benefits.

The Commission was charged by President Bush with coming up with a plan to allow workers to invest a portion of their Social Security taxes into private retirement accounts. Such accounts, in the words of the Commission's report, would give "citizens a legal rather than merely a political right to a portion of their benefits."

Legislation that would provide private retirement accounts has been introduced by Representatives Jim Kolbe (R-AZ) and Charles W. Stenholm (D-TX). To pay for the personal accounts and to put Social Security on sound financial footing the bill would, among other changes:

• cut guaranteed benefits, especially for middle and upper income workers,
• increase the level of earnings subject to payroll tax,
• reduce Cost-of-Living Adjustments,
• accelerate the current schedule of raising the retirement age to 67 from 65, and
• also divert some tax revenues away from Medicare.

For more details click here to read "Notch Causes Lower COLAs".

Source: "Panel Backs Off Claim Social Security Is 'Broken'," William M. Welch, USA Today, July 25, 2001. "Bringing Social Security Into the 21st Century," President's Commission to Strengthen Social Security, July 24, 2001.

For a related story, click here to read "Social Security Privatization Commission Starts Work,"