May 11, 2005
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Cato Announces Nobel Laureates Backing of Social Security Choice
Economists urge reform based on idea of ownership
WASHINGTON -- More than four hundred-and-fifty of America's top economists, including Nobel laureates Milton Friedman, Robert Lucas, Robert Mundell, Edward Prescott and Vernon Smith, are calling for the nation's troubled Social Security system to be reformed by giving workers the option of shifting all or part of their payroll taxes into privately invested accounts. In ads sponsored by the Cato Institute in tomorrow's Roll Call newspaper and The Washington Times, the economists argue that America's Social Security system is facing a financial crisis because of its flawed pay-as-you-go structure. They say that any solution "must uphold the time-honored principles of ownership, inheritability and choice." Demographics have made the current system unsustainable, they say in Cato's Petition: Concerning the Future of Social Security. "In 1950 there were 16 workers paying taxes to support every person collecting benefits. Today there are only 3.3; by 2040 there will be just 2," they argue, adding: "Further, as economists we understand the crucial role private ownership plays in allocating resources and creating a rational framework for decision making." The ads will appear just hours before the House Ways and Means Committee holds a hearing into Social Security reform. Among those testifying before the panel will be Michael Tanner, the director of the Cato Institute's Project on Social Security Choice -- widely considered the leading intellectual impetus for transforming the soon-to-be-bankrupt system into a savings program that would allow Americans to invest their payroll-tax contributions in individual accounts. In his testimony tomorrow, Mr. Tanner will say: "Under the current Social Security system you have no legal, contractual, or property rights to your benefits. Under Cato's proposal, workers under the age of 55 would have the option of diverting their half of the Social Security payroll tax (6.2 percent of wages) to an individual account. The employer's portion of the payroll tax would continue to be paid into the Social Security system to provide survivors and disability benefits, as well as to partially fund continuing benefits for those already retired or nearing retirement." The Cato Institute will also begin running ads next week in major opinion and political publications, including the New Republic, National Review, Reason and The Weekly Standard, outlining the real issues of Social Security reform and maintaining that the crisis engulfing the current system presents a great "opportunity to build a new and better retirement program for all Americans." The ads can be viewed at: http://www.cato.org/pressroom/ssad.pdf
The list of economists and their affiliations can be viewed at: http://www.cato.org/pressroom/economists.pdf
Click here to receive Cato's Daily Dispatch, news releases, and event notices. Contact:
Michael Tanner, director of Cato's Project on Social Security Choice, mtanner@cato.org
Jamie Dettmer, director of media relations, 202-218-4628, jdettmer@cato.org
Kristen Kestner, media relations manager, 202-789-5212, kkestner@cato.org
Evans Pierre, director of broadcasting, 202-789-5204, epierre@cato.org
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