Darcy Olsen's Cato plan is very bad

[National Dialogue Moderator <moderator>]

On several occasions in her postings to this discussion panelist Darcy Olsen 
touts the Cato plan and how good it is for women.  At the Institute for 
Women's Policy Research, we have looked at this plan carefully, and have 
determined that it would be very bad for women.  

For one thing the plan is full of misleading assumptions about women's lives.

For another thing, it is a much more extreme form of privatization than 
Kolbe-Stenholm, for example, which the group has been discussing.  It 
proposes pdivirting virtually all of the payroll tax into private accounts, 
making the cost of transition enormous--why any generation would want to pay 
for two retirement systems (one to pay current retirees and one to set up the 
new accoutns) is beyond me.

And thirdly, most of the benefits to women in the Cato plan go to married 
women and are based, not on privatization perse, but on "earnings sharing."  
All monies earned by either the husband or the wife are split 50-50 and half 
are dropped into each account.  In other words, if the wife stays home, the 
husband's earnings are split equally with the wife, so she gets earnings 
credits even when she's at home.  Soounds good, but it actually hurts some 
women, relative ot the current system, and benefits others.  However, the 
telling point is that CATO no longer supports this planned earnings sharing 
(which makes privatization look good for women).   They have renounced it in 
their more recent plans, saying it is too difficult to administer.  So I'm 
afraid the supposed benefits of the Cato plan to women are not real.  And 
anyway, men would be very unlikely to vote for earnings sharing.


In my view, women are better off with Social Security the way it is than with 
very risky alternatives.

Heidi Hartmann