Democrats Given Anti-Privatization Prep Kits

August 14, 2001

As they returned to their home districts for Congress' August recess, Democrats have been given a packet of materials designed to help them fight individual accounts. The packet, prepared by the Democratic Caucus, includes sample op-eds and news releases, as well as talking points on key anti-privatization arguments.

The sample news release warns that privatization would require "deep cuts in guaranteed benefits." The kit suggests that Democrats warn that privatization proposals would "boost the retirement age to 70," even though no current proposal for individual accounts would do so. Democrats were also advised to focus on high administrative fees, the financial risk of market investing, and the dangers of privatization to women.

Each of these arguments is easily refuted, however. For example, studies have shown that administrative fees would be quite low and manageable (See, "Administrative Costs and Relative Efficiency of Public and Private Social Security Systems," by Robert Genetski, Cato Institute Social Security Paper no. 15, March 9, 1999). In addition, studies show that the current Social Security system penalizes working women, and all women would benefit under individual accounts. (See, "The Benefits of Social Security Privatization for Women," by Ekaterina Shirley and Peter Spiegler, Cato Institute Social Security Paper no. 12, July 20, 1998, and "Greater Financial Security for Women with Personal Retirement Accounts," by Darcy Ann Olsen, Cato Institute Briefing Paper no. 38, July 20, 1998.) Finally, the evidence is overwhelming that market investing is actually less risky than continued reliance on Social Security. (See, "Common Objections to a Market-Based Social Security System: A response," by Melissa Heiger and William Shipman, Cato Institute Social Security Paper no. 10, July 22, 1997.)

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