Debate on social security privatization is going on all around the world. Many Economists continuously debating on social security reforms since 1983, President George W. Bush has repeatedly emphasized that one of his foremost second-term priorities will be to transform Social Security fundamentally. Enacted in 1935 and amended many times since-including major changes in 1983-Social Security provide benefits to workers and their family members upon retirement, disability, or death. Since the program's inception, the size of those benefits always has depended on the earnings of workers over the course of their careers. President Bush wants to change the system so that the amount that each worker collects from Social Security upon retirement instead would hinge on the size of investments in his or her own personal account.
Much is at stake in this debate. More than 96 percent of workers pay Social Security taxes and thereby are entitled to collect benefits from the program. More than 47 million Americans today receive checks from the Social Security system. Although the average monthly payment to those individuals is a modest $895, Social Security constitutes more than half of the incomes of nearly two-thirds of retired Americans. For one in five, it is their only income. Like past generations of Americans, today's workers of all ages will need Social Security to protect them against forces beyond their control-economic ups and downs, inflation, fluctuating investment markets, and possible disability or premature death of a family member. That insurance has been essential in even the best of times, and will be all the more important in an increasingly global economy with large and growing federal budget and trade deficits.
Addressing Social Security's potential long-term financing challenges by taking the dramatic step of diverting its payroll taxes to create new personal accounts would represent a radical departure; it also would be a bad idea.............
