Outgoing SSA Commissioner All But Acknowledges Need For Personal Accounts

January 15, 2001

In a recent interview with the Boston Globe, outgoing Social Security Commissioner Kenneth J. Apfel all but admitted that some system of personal retirement accounts will be necessary to save Social Security for the future, a position contrary to that of the Clinton administration and the Gore presidential campaign. Apfel argued that a universal savings program should be coupled with reductions in benefits paid by the current Social Security system - an almost exact description of personal retirement accounts. At the same time, Apfel warned the political right that they must be willing to come up with the money needed to fund this extra savings.

"I think the left needs to be pushed on their mantra that benefits cannot be reduced, even for future generations," Apfel said. "I think the right needs to be pushed on their mantra that revenues cannot be increased for future generations for this system. Social Security benefits are not going to be able to be as large as they are now in replacement rate terms for future generations because of demographic changes. The guaranteed benefit, and this is heresy on the left, will have to be somewhat lower and there will be a need for a stronger savings component."

This savings component, which Apfel said should be "full and mandatory," would supplement basic Social Security benefits. This defined-contribution element coupled with a reduced guaranteed benefit adds up to a de facto system of personal accounts. Apfel will soon join the faculty of the University of Texas at Austin. During his time as Commissioner of the Social Security Administration, Apfel opposed personal accounts on the grounds that guaranteed benefits would be reduced. Now, it seems, he argues in favor of such guaranteed benefit reductions and for a new private savings element for Social Security. Perhaps bipartisan compromise is possible.

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