SOCIAL SECURITY

MARIE SMITH, American Association of Retired People President, May 18. 2004
CZIKOWSKY: If the government privatizes social security, how would they plan to support those who lose money or don’t receive enough return from their investment? If the government were to make that money up, it would defeat the whole purpose of privatizing. If they don’t make the money up, it would defeat the whole purpose of social security.
SMITH: Well, you have hit on an important point about many plans to fundamentally change Social Security by converting it into something that is like a private defined contribution plan such as a 401(k) account. With Social Security, your benefits are guaranteed for as long as you live and they are increased every year to adjust for inflation. Under a privatized system, everyone would face the risk that they could lose money and their benefits would not keep up with inflation. So you are right, privatizing Social Security makes little sense and it will not strengthen Social Security for future generations.