The AARP says:".. if a portion of existing payroll taxes is used for private accounts, the underlying program will have less revenue to fund the benefits of those currently or soon to be receiving them. This would require dramatic cuts in benefits well beyond what is currently needed in order to restore long-term solvency". We know that as of December 1998, according to the Trust Fund report, workers paid $430 billion in FICA taxes, the Treasury paid the Trust Fund (as paper assets of course) $49.3 billion, beneficiaries paid $9.7 billion of taxes on their benefits, for a total of $489 billion. Beneficiaries received $375 billion. Therefore the surplus was : 489 - 375 = $114 billion. (114/489)x100= 23.3%
The FICA taxes are : 6.2% (employee) + 6.2% (employer)=12.4%
23.3% of 12.4 is 2.88%.
Therefore if 2% of the FICA taxes is allocated to private investments, the benefits of retirees, disabled and survivors will not be affected.
My conclusion is that the AARP statement is misleading.
