A new Social Security system for the new century. (Cato Institute director of health and welfare studies Michael D. Tanner's speech)(includes related article on Chile's welfare program)(Mini-Forum: Social Security Reform)(Cover Story)(Transcript)

Social Security should be "privatized," allowing people the freedom to invest their Social Security taxes in financial assets such as stocks and bonds.

Introduction to the Forum

RONALD S. BOSTER, FORUM EDITOR

Everyone who has studied the problem acknowledges that some reform of Social Security is necessary. Unfortunately, that's pretty much where the agreement stops. I have asked three experts with three quite different perspectives to offer their views - Henry Aaron of the Brookings Institution and Stanford University, Michael Tanner of the CATO Institute, and Andrew Haggard of the Committee for Economic Development.

Social Security reform is an enormously complex issue that can barely be introduced in three brief essays. Nevertheless, I hope these essays whet reader appetites. They span the range of reform options - from essentially full privatization and private retirement saving accounts (Tanner), to a two-tiered add-on system consisting of a scaled-back basic defined-benefit system and private retirement saving accounts (Haggard), to fixing the current system (Aaron).

Some of the different perspectives will be apparent, as will areas of agreement; others less so. Fundamentally, the three authors disagree on the degree of privatization they advocate - from none (Aaron), to partial (Haggard), to full (Tanner). They also disagree on the means to each end they advocate for Social Security. Both Haggard and Tanner would disagree with Aaron's characterization of the size of the problem; nor do they see their call for mandatory contributions as taxes, as Aaron does, because, under both of their plans, the government would never get its hands on the money (not unlike a state requiring motorists to purchase car insurance). They also disagree on the size of the problem; Aaron does not think the problem is as big as do Tanner and Haggard.

Ronald S. Boster edited this policy forum. He is vice president and director of business and government policy at the Committee for Economic Development, a private research and education organization, and adjunct professor at Virginia Tech's Center for Public Administration and Policy. He is also a member of the board of directors of the Bureaucrat, Inc.

Social Security is going broke. The federal government's largest spending program, accounting for nearly 22 percent of all federal spending, faces inevitable demographic and fiscal pressures that threaten the future retirement security of today's young workers. Only by moving to …