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5 Ways To Win the Privatization Debate


By the National Committee to Preserve Social Security and Medicare



When They Say, "Most Americans, especially young workers, support privatization" The truth is ...

There is deep opposition to privatization of Social Security among all age groups and income levels, according to recent polls. These polls have shown that young people fear Social Security will not be there for them, but this skepticism does not mean they want to abandon the system! In a Peter Hart survey, about 70-80% of young people approve of Social Security - a surprising high level of support for any government program. Two thirds of all adults favor strengthening the current system. Only 28% think Social Security should be privatized.

Conclusion: Privatization is NOT the Answer!


Unfortunately, exaggerated media coverage regarding Social Security finances has contributed to the illusion that Social Security is in immediate trouble. And the pro-privatization movement has spent millions of dollars promoting that illusion. That's why the National Committee to Preserve Social Security and Medicare is spreading the truth, through education material like the booklet you're reading right now. And that's why NCPSSM is leading a massive petition and political action campaign to block widespread privatization. By using the facts in this booklet, you can help the truth - and Social Security - win! Thank you for supporting Social Security for the benefit of every generation of Americans!

Our Social Security System vs. "Privatization"

Social Security is a successful intergenerational program that has served this country well. Yet some groups want to "privatize" Social Security by taking part or all of the payroll tax money that now goes into the Social Security trust funds and invest it instead in private investment accounts. Under Social Security, people earn the right to participate by working and contributing. The program was never intended to be an investment program. With broader policy goals than private retirement plans, its intent is to provide guaranteed income to seniors, disabled citizens, survivors, and their families. Privatization would severely undermine this system. The arguments for privatization can seem persuasive at first, but they are all hollow and easily disproved. Following are five simple rebuttals to many common and misleading arguments being spread by the privatization movement. Carry this booklet with you and, when you hear any of the pro-privatization claims, refer to the facts provided here.

When They Say,
"Social Security will soon go bankrupt," The truth is .

If Congress does nothing - makes no changes or "reforms" - Social Security is projected to deliver full guaranteed benefits until at least 2042. Even after 2042, again without any changes, the trust funds will continue to pay 70 percent of benefits for years after that. It's true, the aging baby boom generation will strain Social Security in the future. However, if Congress enacts modest changes, Social Security should be able to meet 100% of its benefit obligations long after the baby boomers have retired. Privatization would actually hasten the projected shortfall, since it would divert payroll tax dollars away from the trust funds and into private investments.

When They Say, "Workers could get a better return by investing in the Stock Market," The truth is ...

Right now, Social Security provides a guaranteed income, paying benefits every
month for life, with increases for inflation. After adjusting for risk, Social Security has a much higher average rate of return than any mix of financial assets in private accounts. And risk must be taken into account, because stock market returns are never guaranteed!
As we've seen in recent months and in past years, returns can fluctuate wildly. One need only be reminded that between 2001 and 2003, the NASDAQ lost 75% of its value. Nest eggs can disappear in an instant - and take months, if not years, to rebuild. With privatization, some might do well, many might lose - but our society would lose the security of an adequate "safety net" for retirement income, let alone for disability and survivor protection benefits that would be jeopardized under privatization.

When They Say, "Social Security is unfair because tomorrow's workers
will have to support the Baby Boomers' retirement,"
The truth is ...

In fact, the Boomers have helped pre-fund part of their benefits by building a huge surplus that should keep Social Security alive and well for many years. With privatization, however, workers would end up in a double bind - paying taxes to support the Boomers' retirement plus investing money in their own individual accounts, in hopes of building retirement funds for themselves. To make things even worse, today's workers would have to bear the transition costs of switching to privatization, estimated at up to $9 trillion for total privatization! Even partial privatization of 2% would cost at least $1 trillion over the next ten years - money that our government simply does not have.

When They Say, "Privatization gets rid of the inefficiency of big government,"
The truth is ...


Administrative costs for Social Security are very low - less than 1% of the program's budget. Diverting money to the stock market would incur the very high costs of brokers'commissions, mutual fund management fees, and other expenses inherent in buying and selling stocks and bonds.



© 2004 by the National Committee to Preserve
Social Security and Medicare
For more information or additional copies
of this booklet, write to:
The National Committee to Preserve
Social Security and Medicare
10 G Street, NE, Suite 600 . Washington, DC 20002-4215
www.ncpssm.org

You can also e-mail your request to
memberservices@ncpssm.org or call (202) 216-0420.




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