President's Commission to Strengthen Social Security

November 29 Meeting

At the November 29 meeting of the President's Commission to Strengthen Social Security, the Commission will begin to discuss ways to make Social Security sustainable with personal accounts.

Fulfilling the President's Principles for Reform

Each of the options before the Commission is consistent with the principles established by the President. Among them:

• No cuts in benefits for current or near-term retirees.
• No payroll tax increases.
• Voluntary personal retirement accounts.

The Options Demonstrate the Benefits of Personal Accounts

The Commission has presented a full range of options for restoring fiscal sustainability to Social Security. Under each of them:

Increased Benefits from Personal Accounts

• Personal accounts would increase benefits for individuals who selected the accounts.
• Expected benefits through the accounts would increase in every case relative to today's levels.
• Expected benefits through the accounts would increase in every case relative to the benefits payable without personal accounts.

Extra Protections for Low-Income Individuals: Each of the Commission's options would have special benefits for low-income participants.

• Under each option studied by the Commission, a low income American with an account holding 60% stocks, 40% bonds could expect higher benefits than promised by the current system even if payroll taxes were increased by 15 percent.

Benefits of personal accounts go beyond higher retirement incomes.

• The opportunity to bequeath a measure of wealth to the participant's heirs.
• The security that comes from ownership and control over one's retirement benefits, as distinct from reliance on an untenable government promise.

Extra Protections for Women, Minorities, Low-Income Groups

• Increase Widows' Benefits: The recommendations before the commission would increase benefits for widows by as much as 50 percent.
• Increase Protections for Divorced Women: The recommendations before the commission would offer greater protections for divorced women, establishing a property right to a portion of Social Security benefits regardless of the length of the marriage.
• Guaranteed Protections Against Poverty: New protections for low-income workers would for the first time guarantee that a lifetime minimum wage worker will not retire into poverty.
• Passing Wealth to Heirs: The inheritability of personal account balances offers added benefits to demographic groups with shorter life expectancies, such as African Americans.
• Wealth Accumulation: Personal accounts will provide new wealth for the one-half of American households, including a majority of African Americans and Hispanic Americans, who currently have no appreciable financial assets.

A Call for Bipartisan Leadership to Strengthen Social Security

• A Year of Discussion: The Commission recommends that proposals to strengthen Social Security be discussed throughout the next year before the Congress undertakes legislative action.
• No Privatization: The Commission does not support "privatization" of Social Security. It has considered and rejected proposals to replace Social Security wholly with a system of personal accounts and recommends that personal accounts be established to augment the Social Security safety net and to provide individuals with a higher rate of return.
• Commend Congressional Sponsors of Plans: The Commission commends Congressmen and Senators from both parties who have authored plans to strengthen and preserve Social Security.
• No Plan, No Play: The Commission calls on all who are concerned about Social Security to join the Commission and Congressional sponsors of plans in offering constructive, substantive proposals. Criticism of a specific plan to shore up Social Security is not credible unless it is accompanied by a specific alternative.