Privatization of Social Security Would Secure Workers' Retirement Benefits
April 20, 2000
Workers lack property rights in current Social Security system
A Social Security system based on privatized individual accounts would provide
workers with the benefits and safeguards of actual ownership not currently secured
in the government-run system, writes the author of a Cato Institute study released
today.
One of the most enduring myths of Social Security is that a worker has a legal
right to his Social Security benefits, notes Charles E. Rounds Jr., a professor
of law at Suffolk University in Boston, in " Property
Rights: The Hidden Issue of Social Security Reform." Many workers assume
that, by paying Social Security taxes, they are legally guaranteed benefits
from the system.
"The truth is exactly the opposite," Rounds writes. "It has long been law
that there is no legal right to Social Security." Rounds points out that two
important Supreme Court cases, Helvering v. Davis and Flemming v.
Nestor, hold that the payment of Social Security taxes conveys no property
or contractual rights to Social Security benefits.
As a result, says Rounds, a worker's retirement savings depend entirely on
the political decisions of the president and Congress. Benefits may be reduced
or even eliminated at any time during a financial crisis, and they are not inheritable,
Rounds warns. Congress has already arbitrarily reduced Social Security benefits
for some groups of workers, for example, by raising the retirement age from
65 to 67, reducing benefits for retired federal workers and imposing earnings
tests both for individuals who work after the age of 65 and survivors' and disability
benefits.
Rounds recommends that we move to a privatized Social Security system in which
benefits could not be arbitrarily reduced or taken away by the government. Workers
would have true ownership of their retirement savings and would be able to pass
them on to their heirs like any other property. "Not only would such accounts
earn much higher rates of return, and therefore greater retirement benefits,
through private investment, but also those benefits would be the worker's property."
Social Security Privatization no. 19
2001 Index | 2000
Index | 1999 Index | 1998
Index
|
