The announcement reflects a fundamental math problem with privatization. By taking payroll taxes out of the system for investment into private accounts, Social Security would go bankrupt even sooner. Painful cuts in benefits would have to be made to make the numbers add up.

The Commission was scheduled to complete its work as this issue went to press. Commission co-chairman, Daniel Patrick Moynihan, the former Democratic senator from New York said the decision to propose multiple ways of creating private accounts reflected a recognition that different approaches had different strengths and weaknesses.

It also reflected a political reality check. According to The Associated Press some congressional Republicans are leery of releasing a privatization plan during a slumping stock market while heading into the 2002 congressional elections. 

Sources: "Benefits Panel Plans Array of Choices for Solvency," Richard Stevenson, The New York Times, November 10, 2001. "Dems Eye Bush Social Security Plan," Leigh Strope, The Associated Press, October 31, 2001.

To read more on this issue click here to read "Social Security Commission Releases First Report," from the October 2001 issue of The Social Security & Medicare Advisor, http://www.tscl.org/newcontent/101184.asp.

January 2002