AARP opposes Social Security privatization

AARP is strongly opposed to privatization of Social Security and is reminding members of Congress and the public about the risks of carving out private accounts from Social Security which millions of older Americans rely on as their only source for guaranteed retirement income. In full-page advertisements AARP warns that turning Social Security into a program where benefits are based on private investments poses serious risks. "Winners and losers are stock market terms. Do you really want them to become retirement terms?" one ad asks.

"We must not forget that Social Security is the only guaranteed source of income that a majority of workers have for their retirement. AARP will not agree to jeopardize people’s Social Security benefits," said AARP President Marie Smith. "Americans are saving too little, whether on their own or through plans such as 401(k)s. Workers will need Social Security for its guaranteed lifelong benefits when they retire," she added.

AARP CEO Bill Novelli said, "There are right ways and wrong ways to strengthen Social Security. Passing on several trillion dollars in additional federal debt to future generations as a result of diverting money away from Social Security to fund private accounts is the wrong way." "We are not advocating for the status quo," Novelli explained. "We need to make a series of modest changes sooner rather than later to strengthen the program for future generations. But siphoning funds out of Social Security to finance private accounts could make the program’s financial outlook worse." (Related article: Is Social Security in trouble?)

But Economist Allen W. Smith, Ph.D., author of "The Looting of Social Security: How the Government is Draining America's Retirement Account," is disturbed that the AARP continues to deceive its members and the public by falsely claiming that the Social Security trust fund holds sufficient assets to pay full Social Security benefits until 2042. The AARP is waging a strong battle against President Bush's attempt to privatize Social Security. I applaud the organization for that effort. However, I fault the AARP for continuing to mislead its 35 million members and the public by claiming the IOUs held by the Social Security trust fund are just like those that private pension funds invest in. They are not. The trust fund holds no regular marketable Treasury bonds, and the special issue IOUs it holds are nothing more than accounting entries showing that the government has 'borrowed' and spent every dollar of the $1.5 trillion surplus generated by the 1983 payroll tax increase, leaving the fund with no real assets. Only IF the government chooses to raise taxes or borrow massive additional amounts in order to repay its debt to Social Security will the program be able to continue paying full benefits after 2018, and that is indeed a very big if," he says. (Related article: Social Security privatization approach questioned by experts)

"President Bush, like his predecessors, has raided the Social Security trust fund, in violation of both federal law and his own pledge not to raid it. Bush used $509 billion of Social Security surplus during his first term, mostly to fund his large tax cuts, and he continues to spend approximately $438 million of Social Security money each and every day. Why isn't the AARP trying to get Bush to stop looting Social Security and begin paying back the $1.5 trillion that has already been looted instead of trying to convince the public that those worthless non-marketable special issue government IOUs in the trust fund can somehow miraculously be used to pay Social Security benefits until 2042?" Smith asks.

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