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| FIXING SOCIAL SECURITY | |
 February 2005 
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President Bush has launched a national campaign to generate support for his plans to reshape Social Security, including the controversial option of personal investment accounts for younger workers. Peter Orszag, senior fellow in economic studies at the Brookings Institution, and Michael Tanner, director of health and welfare studies at the Cato Institute, answer your questions about the voluntary personal accounts and other aspects of the president's plan. Special Report: Social Security Reform
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Denise Cooke of Doniphan, Mo., asks: Many of the people in this area make minimum wage. Unemployment is high and literacy is low. The average person knows nothing about investing. How will these people fare under President Bush's new plan? Peter Orszag responds: Not particularly well, in my view. The plan does ostensibly restrict investment choices to well-diversified index funds, and that may help to avoid really poor investment decisions. But it's unclear whether that restriction will be sustained over time. Social Security is supposed to provide the foundation of retirement income, not be the end-all-be-all for a comfortable retirement. There are places to take risks in retirement planning; the core tier of retirement income (provided through Social Security) is not one of them. Michael Tanner responds: They would be among those who would benefit most. Today low-wage workers have little opportunity to save and invest, to build real, inheritable wealth. But, individual accounts would give them that opportunity. The money in their accounts would belong to them, and could be passed on to their children at death.
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