Social Security Discussed in House
WASHINGTON (AP) _ As Washington debates ways to rescue Social Security, a panel of top economists said Wednesday a consensus exists for using personal investment accounts to augment the retirement system.
But witnesses before the House Ways and Means subcommittee on Social Security differed on the degree that such personal accounts should play in any rescue of the system.
A 1997 Advisory Council on Social Security suggested two ways to allow people to invest some of the taxes that now support Social Security into private retirement accounts. Since that time, various members of Congress have proposed versions of private retirement accounts.
Rep. Nick Smith, R-Mich., has a proposal to put 2.5 percent of a person’s paycheck into new personal retirement savings accounts, which would invest in stocks and other investments, with the investment rising to 10.2 percent of a paycheck by 2070.
``The promise of personal accounts is they can dramatically increase return for workers,″ Smith said.
Alicia Munnell, a former member of President Clinton’s Council of Economic Advisers, said ``individual accounts are a good idea, but not if they involve major reductions in the protections offered through today’s Social Security program.″
``We should be talking about adding on savings options, not cutting back on existing benefits,″ she added.
Munnell, now a professor at Boston College, suggested a fund could be built up within the Social Security system to invest in corporate stock.
A more severe assessment of Social Security’s problems was delivered by Laurence J. Kotlikoff, a professor at Boston University, who called on privatizing the retirement portion of Social Security.
His plan would eliminate the Old Age Insurance payroll tax and replace it with compulsory contributions to personal security system accounts. That money would be invested in a broad ``global index fund of stocks, bonds and real estate.″ Current retirees and workers would receive their full accrued Social Security retirement benefits, he said.