Reengineering Social Security in the New Economy , by Thomas F. Siems, January 23, 2001. The Economic Policy Institute and the Center on Budget and Policy Priorities released Tuesday a report on rising income inequality in the United States in the 1990s. It is therefore ironic that these two groups adamantly oppose Social Security privatization, the policy with the best chance for building wealth among low-income individuals and households. In fact, Harvard University Economics Professor Martin Feldstein, former chairman of the Presidents Council of Economic Advisors, estimates that if Social Security were privatized, the concentration of wealth in America would be reduced by half. The lowest-earning 20 percent of American seniors receive 81 percent of their retirement income from Social Security.
Many retirees have no other income.
High payroll taxes and low benefits prevent low-income Americans from building wealth of their own. A privatized Social Security system, which would let workers invest their payroll taxes through personal retirement accounts, would provide retirement incomes far higher than Social Security. In addition, personal accounts would build enough wealth that even low-income workers could leave a bequest to their heirs. Social Security privatization is the solution. The Cato Institute Project on Social Security Privatizaton E-mail the Webmaster 1000 Massachusetts Ave.