Housing Analyst in the Domestic Social Policy Division at the Congressional Research Service (CRS)
Con to the question "Should Social Security Be Privatized?"
"Advocates of Social Security privatization are selling the idea of private accounts to young people as the best way to secure their future retirement. Yet under the Social Security plan outlined in President Bush's 2005 State of the Union address, sustaining promised benefits for those age fifty-five and over would require the government to borrow nearly $5 trillion over twenty years...
If privatization proposals were adopted, young people would lose in three significant ways:
Reduction of Benefits. The Commission’s privatization proposal would, over the next 47 years, reduce benefit levels by as much as 44 percent below current Social Security benefits, and 28 percent lower than the benefits that would be provided even after the trust funds become depleted.
A Change in How Benefits Are Calculated... This plan would end the policy of linking Social Security benefits to wage growth, a practice that has been in effect since the 1970s...
Performance and Administrative Costs of Private Accounts. Returns on private accounts are not likely to be as high as some privatization advocates predict. Some will do better than the averages quoted and some worse. No matter how the stocks perform, workers who elect to create investment accounts would receive even deeper cuts in their guaranteed benefits in order to pay back the money borrowed to finance the account."
False Promise: How Social Security Privatization Would Sting Young Adults," www.socsec.org, Mar. 9, 2005