Posted on: Wednesday, December 5, 2001

Editorial
Social Security plans fail to resolve doubts

President Bush campaigned on a promise to "reform" Social Security with individual accounts that would give millions of Americans the opportunity to amass some wealth for retirement.

Toward this end, he appointed a commission to find ways to let workers invest a portion of their own payroll taxes. The commission has come up with three alternatives, all variations on the same theme: Some portion of payroll taxes could be invested in a choice of three types of funds (growth, moderate risk and conservative) made up of stocks and bonds.

It's a fact that over any appreciable period of time, the stock market produces a much more handsome return for investors than the return provided by the government for Social Security taxes.

But workers who might be intrigued with these ideas might want to think about the collapse of the dot.com bubble, then the market dive following Sept. 11, and now the failure of the giant Enron Corp. It's fair to ask whether sophisticated and diversified investors would be hurt in the way that ordinary retirement accounts would be.

We have the uneasy feeling that the huge new market capitalization from Social Security accounts would benefit the well-advised institutions and millionaires at the ultimate expense of the ordinary worker.

The commission's plans will be approved in final form next month and sent to the White House. They deserve intensive and thorough debate.