Social Security and Its Discontents

Social Security is the largest government program in the world. But it is also a deeply troubled one, on the verge of financial collapse. Within 15 years Social Security will begin running a deficit. Overall, the program is more than $26 trillion in debt. Without fundamental reform it will not be able to pay the benefits it has promised to our children and grandchildren.

That has prompted the most far‐​reaching discussion of the purpose and structure of Social Security since the program was enacted in 1935. Not so very long ago, Social Security was rightly regarded as the “third rail” of American politics—touch it and your career dies. But no longer. Polls today show that the vast majority of Americans support proposals that would allow younger workers to privately invest at least part of their Social Security taxes through individual accounts.

For more than 25 years the Cato Institute has led the debate for Social Security reform, arguing that the program is fundamentally flawed and calling for greater freedom and choice for working Americans. Social Security and Its Discontents represents the best of Cato’s publications on the issue. It includes essays by the nation’s top economists and Social Security experts, discussing Social Security’s finances; the urgent need for reform; how the program treats women, minorities, and low‐​income workers; and the options for reform.

Edited by Michael D. Tanner, this collection shows conclusively that by allowing younger workers to privately invest their Social Security taxes through individual accounts, we can

• help restore Social Security to long‐​term solvency, without massive tax increases;

• provide workers with higher benefits than Social Security would otherwise be able to pay;

• create a system that treats women, minorities, and young people more fairly;

• allow low‐​income workers to accumulate real, inheritable wealth for the first time in their lives; and

• give workers ownership and control of their retirement funds.

With Social Security promising to be a hot‐​button issue for the coming election campaign and in the years ahead, this book is essential reading for anyone who cares about what kind of country we will leave to our children and grandchildren.

Michael D.Tanner is director of health and welfare studies at the Cato Institute and the director of the Cato Project on Social Security Choice. He is the author of several books, including, The Poverty of Welfare: Helping Others in Civil Society, and the coauthor of A New Deal for Social Security. He lives in Takoma Park, Maryland.

“This excellent book is the best recent contribution to the extensive literature on the necessity of privatizing Social Security. Avoiding the weaknesses of many edited collections, editor Tanner does a splendid job of minimizing repetition in material and organizing the topics in a logical sequence. The particularly strong arguments include the absurdness of trying to “save Social Security”; the public’s perception of risk in a privatized system; the negative outcomes of the current system on African Americans and women; the false promises suggested by the Trust Fund; the impact of increased private‐​sector savings on the domestic economy; and the phony accounting involved with the concern about transition costs in moving to privately owned retirement accounts. Contributors include Martin Feldstein, Milton Friedman, June O’Neill, Thomas Siems, and Daniel Shapiro. In sum, this is an excellent reference and a serious read on one of the most important public finance issues for the 21st century.”

—Choice

“Congratulations to the Cato Institute for compiling this excellent and comprehensive look at Social Security. The book brings together a broad range of opinion that lays out the challenges facing Social Security and proposes practical solutions. The need for reform comes through loud and clear from a host of voices whose expertise, insight, and understanding of the issues are absolutely first rate. This book should be required reading for anyone concerned about Social Security and its impact on the future of our citizens.”

—Donald B. Marron, chairman and CEO of Lightyear Capital and the former private‐​sector
co‐​chair of the National Commission on Retirement Policy

“This is a must‐​have compilation of the best work on Social Security reform. With the baby‐​boom generation getting ready to retire at the end of this decade, the best opportunity for reform will be in the next few years. This book is sure to be a key part of the political debate during this year’s election campaign and the legislative action likely to take place next year to modernize and strengthen the Social Security system.”

—Lawrence Lindsey, former director of President Bush’s National Economic Council

“It is political malpractice for Congress to continue to ignore the looming problems that our Social Security system faces. For years, the Cato Institute has been in the forefront of the fight for Social Security reform. This volume shows why. Some of the nation’s leading economists, businessmen, and academic experts provide a detailed and compelling analysis of the problems facing Social Security and why ownership must be part of the solution.”

—Sen. Lindsey Graham