Opening Statement

[National Dialogue Moderator <moderator>]

		Opening Statement of Carolyn Weaver

When policy makers sit down to hammer out the details of a social
security reform bill, they will have to deal with not just the
long-range financing gap but also the loss of confidence among
workers in the long-term viability of the system and the growing
concern about "generational equity."  Social security is not offering
today's workers a return on their taxes anywhere near as favorable
as it offered workers who retired in the past.  These concerns--loss
of confidence and declining rates of return--contribute to the
growing interest in investment-based alternatives to social security.

Part of what makes personal retirement accounts so attractive--and,
in my view, a key reason why they dominate a policy of centralized
investment of trust fund reserves--is that they would deal head-on
with the loss of confidence while ensuring that any improvement in
rates of return is actually captured by workers.

With personal retirement accounts, workers could be confident that
the taxes they pay are saved and invested to meet their retirement
income needs.  The reason is that personal retirement accounts are
built on private ownership and workers would have legally enforceable
claims to their accumulated retirement funds.  Workers would own
their contributions and would invest them to generate investment
earnings that they also owned.  The annuity they drew at retirement,
or the funds they withdrew in some other way, would be based on
their accumulated investment funds.

Under the present system, workers have no property right to the
taxes they pay or to the benefits the Social Security Administration
reports that they will be eligible to receive some day.  What you
receive years or decades in the future depends on the decisions
made by Congress years or decades in the future, which, in turn,
depends on economic, demographic, social and political developments
in the years ahead as they affect future taxpayers' willingness
and ability to make good on benefit promises made in the past.
The same would be true with centralized investment of the trust
funds.

Personal retirement accounts also offer workers the assurance that
they get the benefit of increased investment earnings.  Centralized
investment offers no such assurance.  If the stock market performs
better than expected, an account in the Federal Treasury--the social
security trust fund--would be credited with more revenue.  Who gets
the benefit of this increased revenue?  Is it workers, who get a
tax cut or a promise of higher future benefits?  Is it the rest of
the federal budget, which can use new revenues that are not reinvested
or spent on benefits?  Is it retirees?

If you are interested in improving the return on workers' taxes
and bolstering the confidence of working Americans in the long-term
viability of social security, personal retirement accounts are the
way to go.

Carolyn Weaver