Privatize Now, for the Future

By now it's almost a clich that those of us in our 20s believe we're likelier to see a UFO than a solvent Social Security. Could this be due to the fact that around 2030, the Social Security Trust will be in financial trouble - without sufficient funds to pay us full benefits when we retire? Or is it possible we believe this because the trust fund that is supposed to pay us these benefits is made up of government IOUs, which Sen. Ernest Hollings (D) of South Carolina has termed the 21st-century equivalent of Confederate war bonds?

Our Social Security system is fatally flawed. What has been termed the greatest Ponzi scheme ever is going to collapse. When it does, it will fall squarely on the heads of every person under the age of 30 today. Yet neither presidential candidate will seriously consider touching Social Security. A message to President Clinton and Senator Dole: Now is the time to replace the current system with one based on privatization.

Consider: To sustain the current system would require that payroll taxes be raised to a level of between 25 and 40 percent (half paid by employer, the other half by employee). And what can we expect from such a hike? A negative return on our investment - and no increase in benefits.

Now consider this: Under almost any proposed system of partial privatization of Social Security, where we would be able to invest a percentage of our payroll tax into an IRA, we would see an increase in benefits and would avoid paying that confiscatory payroll tax looming so ominously in our future.

Opponents of privatization say Social Security is an insurance program meant to shield the elderly from poverty, not a retirement plan. This is simply not true: Even millionaires are allowed to collect from the system. Nor will it be true in the future: If the rollback of private pensions continues, more people than ever will be forced to rely on Social Security for retirement.

Contrary to some critics' beliefs, privatization is not a conservative conspiracy to dismantle government. Nor is it a Wall Street coup intent on taking over federal retirement funds. It is a proposal that would replace the pyramid scheme we call Social Security with one based on personal savings. It would ultimately stop the senseless investing in government bonds that ultimately will have to be redeemed with our tax money, and replace it with one that invests in private markets, as most state pensions do today. It will allow us to enjoy the same level of retirement benefits our grandparents have had.

Perhaps more important, privatizing the system would send a message to my generation that politicians care about something more than their own political futures and are willing to consider the Social Security plight my generation faces.

Privatization involves risk, but refusing to act involves even greater risk. There is still time to change the system. Every serious proposal envisions taking care of current beneficiaries. No one will be left in the cold. But 15 years down the road, when 73 million baby boomers begin retiring, it will be too late to privatize. There won't be enough workers to support the system or a belated transition to a privatized system.

True, impending collapse is probably more than 30 years away. But for our nation's leaders to continue to ignore the problem and refuse to consider privatization is shortsighted and irresponsible. Both presidential candidates are fond of saying the upcoming election is for our future. Their refusal to consider Social Security reform, however, sends an entirely different message.