University High School student Shara Esbenshade on privatizing social security
My name is Shara Esbenshade. I am a freshman at University Laboratory High school and a member of the Uni High Activism Club.
On Tuesday, April 26th, President Bush presented his new plan for Social Security to Congress. Although many politicians, even republicans, and the public are doubtful of privatizing social security, if this were to be passed, the effects would be drastic.
Economically, the plan is not good for any working person or for the country as a whole. The average worker would lose $152,000 in guaranteed retirement benefits, according to the American Federation of Labor-Congress of Industrial Organizations, and even those that chose a private account would have retirement benefits cut by 40%. Surveys show that most people do not possess the basic knowledge necessary to profit off of the stock market, so there would be only minimal growth in some individual accounts, while others would lose money. What's more, is the transition to a new system would cost an enormous amount. Since the Baby Boomer generation will begin to retire in 2018, this new system would immediately run out of money and be forced to borrow from private accounts to pay the retirement benefits. Overall, privatized social security could put the country's deficit at $4.9 trillion in debt (mostly to foreign countries).
Second, the political consequences would not be pretty. Privatized accounts would inevitably be accompanied by political corruption. Large Wall Street investing firms would profit greatly off of private accounts, and politicians would have the power to decide which company makes how much off of account fees. Also, the system would require an entirely new branch of government bureaucracy. Economist Francis X. Cavanaugh estimates that 10,000 well-trained workers would have to be hired to oversee the accounts and answer questions.
The scariest effects, however, would be moral ones. First, privatization would transform social security into an institution where it's each person for them self, and destroy the idea of people caring for one another. In addition, if social security were privatized, the government could no longer be relied on to ensure that people will receive money when they are in need. I believe it is the government's duty to provide for those who aren't able to do so for them selves. And it is the citizens' right to demand this of the government. If people can't be ensured economic protection from the government, there will be no trust between citizen and state, something that is vital to a healthy nation.
There are simpler and less dismal ways of fixing social security. If the unemployment rate were decreased by just 1 or 2%, social security would receive enough money to survive far into the foreseeable future. Another possibility is to raise the $90,000 cap. Currently, if someone makes over $90,000 a year, they still pay only 6.2% of $90,000 as social security tax and not 6.2% of their actual salary. Ideally, this cap could be eliminated, ensuring the survival of social security forever.