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DLC | Talking Points | November 1, 1998
DLC Talking Points: Social Security Reform
As the country prepares to debate how to preserve Social Security for the 21st century, here are
several key New Democratic principles for framing the discussion:
This is no time for a "hands off" approach to Social
Security. The system will face insolvency once the baby boom generation begins to
retire. If we wait to reform Social Security, the gap between revenues and benefits will grow and options
for making the system fair and adequate will shrink. The ratio of workers paying into the system to
retirees drawing benefits from it is
shrinking rapidly. Given this, "saving Social Security" without reforming it would mean
diverting an ever-higher share of national wealth to keep today's benefit structure intact. If we fail to
restrain Social Security expenditures, we risk starving other key public investments and stifling the
economic growth that makes generous benefits possible.
Conservative total-privatization schemes are too risky and ignore Social Security's
social insurance function. While limited privatization may help encourage personal
savings and increase the pool of pension revenues, total privatization would put the system's stability at
risk. In addition, Social Security provides social insurance against such catastrophes as disability or the
death of a spouse. Converting the system entirely into privately controlled savings accounts would gut
this social insurance function, which if anything should be strengthened.
Ruling out personal accounts ignores the importance of encouraging personal
savings for retirement. At a minimum, today's workers should have the chance to
control some portion of their payroll taxes in investment accounts that would both increase the
"return" on payroll taxes and encourage supplemental private saving for retirement.
Social Security reform should not occur in a vacuum. As we
consider how to preserve Social Security, we must keep other challenges affecting retirees and their
families in mind, especially the modernization of Medicare and efforts to encourage private
long-term-care insurance.
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