CSE: Government Meddling Greater Threat to Social Security Reform than Corporate Misdeeds

July 26, 2002

Citizens for a Sound Economy staff economist Jason Thomas reports that the markets will not be the source that taints the idea of Social Security reform. According to Thomas, the government will do a fine enough job fumbling the issue: "Government action may do more to undermine the benefits of reform than any corporate misdeed."

Thomas also suggests that individual control over Social Security savings should be workers' ultimate goal:

"Further problems in the markets will provide elected officials with further opportunities to aggrandize their role in the economy, PARTICULARLY if Social Security reform begins to gain acceptance. This is not to say that personal retirement accounts are an undesirable policy option; nothing could be further from the truth. But it is worth noting that nothing creates more anxiety among voters than retirement finances, and when future scares arise, policymakers will capitalize on them to internalize prospective rents. Future scares could lead to regulations on acceptable financial services firms, portfolio composition, and financial products – all to the benefit of the policymakers who make the relevant decisions instead of investors. Thus Social Security reform must remain faithful to idea of "privatization," if not its verbiage, if it is to maximize its benefit to retirees."

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