Social Security Goes to the Senate Floor

September 29, 2003

On September 22 four senators took the Social Security debate to the Senate floor. Sens. John Sununu (R-NH) and Rick Santorum (R-Pa.) emphasized the necessity of moving to personal accounts within the Social Security system, and Sens. John Corzine (D-NJ) and Dick Durbin (D-IL) criticized privatization and said Social Security needs to remain a "guarantee." Both sides agreed on the need to take action because Social Security faces a huge shortfall in coming years.

Sen. Sununu opened the debate: "We need to strengthen Social Security by improving the rate of return of investments made within the system, and strengthen Social Security by extending the solvency of the trust fund by, I believe, empowering individuals."

Focusing on the opportunities average workers lose by remaining in the current system, he added: "Those with high incomes in America have IRAs and 401(k)s; they have access to personal retirement accounts or retirement security investments that are independent from Government. Why is it that we are afraid to give that same economic empowerment to those at the lower side of the income scale?

"These personal accounts create a real asset. … The opponents of personal retirement accounts say: We make a promise; we have a retirement promise within Social Security; we don't need to allow the individual to own the asset.

"Well, I maintain that a promise is something very different than owning an asset. If you don't believe that, you can go to developing countries where they don't have private property rights, to former Communist countries where the state always promised to allow them to keep their land or promised to provide a pension. Owning something is very different indeed than simply having a government promise.

"We want to empower them with a real asset that they can count on to be there when they retire. Over time, with a higher, stronger rate of return, the solvency of the overall retirement security system will be strengthened. The worst thing is to do nothing."

Sen. Santorum dismissed Social Security's "guarantee" as worthless: "If my colleagues want to talk about guarantees, ask the people back in 1978 and 1984, after the 1977 and 1983 changes in Social Security, whether that benefit is guaranteed. In both 1977 and 1983 benefits were reduced. So this idea that there is some guarantee out there is only as good as the next Congress's vote. The real guarantee is ownership. One owns that money in their account. That is a private property right that is now not subject to the whim of the next Congress to take away from an individual. …We have proposed a solution that uses the power of the market, which uses individual choice."

Santorum continued his argument in favor of private ownership by demonstrating the success of private pension schemes: "One of the issues is, 'Do we include people who are not now in Social Security in Social Security, like teachers, local government employees, State employees who are now exempt?' They are vehemently against losing their investment-based Social Security system if they have to trade it for a pay-as-you-go, promise-from-politicians system that we have. …The reason is because it works."

The full text of the September 22 debate is available on the Thomas legislative information website.

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