As the White House Conference on Social Security meets, no fewer than four bills circulating in Congress aim to privatize our 54-year-old system. Privatizers want to divert payroll taxes into individual accounts; instead of collecting Social Security when we retire, we will cash in our stocks and bonds. This idea, unfortunately, has, as they say, legs: Powerful interests and well-nurtured fears are propelling the scheme. But it’s a profoundly bad idea.p. Social Security needs amending to prevent a projected shortfall. The causes ofthat shortfall are revealing in themselves: low pay and low growth. Yet, any amendments should enhance the best of our system with minimal cost, disruption andinefficiency. Privatization relies too much on stock and bond markets, makes the young pay for the two programs, worsens the Social Security deficit, boosts administrative costs from 1% to 20%-30% and suddenly makes benefits unpredictable for more than 70 million workers.p. So why do many people think Social Security is bankrupt and privatization inevitable? Well, many believe the old eat the young, that greater longevity and too few workers will have to support too many aged baby boomers. But counting babies is easy for the Social Security actuaries. They have already built in the cost of the boomers’ retirement.p. The Social Security actuaries did blunder in two ways. First, by their own hard-nosed, conservative economic assumptions of only a 1.7% growth. If they had assumed the U.S. economy would grow at just slightly less than the historic average of 2.5%, half of the deficit would disappear. And second, by not foreseeing that there would be no growth in real wages during the 1980s. That never happened before.p. Some people are drawn to private accounts, an attitude fueled by the manufactured fear of a Social Security crisis, a bullish stock market, legalized gambling and Powerball fever. A wing of the Republican Party opposed Social Security in1935, tried to block Social Security improvements in the 1950s and 1970s and in1972 helped to form the Cato Institute, a Washington think tank whose founding mission was to investigate making Social Security voluntary. Privatizers point to the 1% return that younger workers will get from Social Security premiums compared to untold returns on Wall Street.p. But comparing Social Security to a mutual fund account is nonsensical. Social Security is insurance—life insurance, disability insurance, insurance for living a long time past retirement in an inflation-ridden economy. No one computes the rate of return on fire insurance.p. You wouldn’t know it from all the hysteria, but the present Social Security problem is easy to fix. Back in 1983, when the wretched economy of the ‘70s put Social Security in dire straits, it was feared that it would run out of money in 18 months. The Bipartisan Commission on Social Security, commonly referred to as the Greenspan Commission—named for its high profile chairman, Alan Greenspan—forged a compromise that raised payroll taxes by 42% and cut benefits by raising the retirement age. There was celebration, not protest. Unfortunately, President Reagan also dramatically lowered the tax rate for the wealthy, thereby increasing the gap between the rich and the nonrich.p. People and politicians supported the system and privatizers stayed silent because the stock market was abysmal for more than a decade; the Standard&Poor’s 500 had negative real returns in the 1970s.p. Now the system could be fixed completely with far less. Workers could contribute 8.3% of their pay rather than the current 7.2%. But, if the economic growth assumption was boosted and the cap on the payroll tax was hiked from $68,400 to $97,000 per year, the increase would be far less. The cap means that Michael Eisner and Bill Gates appear to the Social Security system as $68,400-per-year men. There’s social equality for you.p. And no one has ever bothered to ask the American people if they would be willing to pay 1% more in payroll taxes to make the problem go away for 75 years. Wall Street stands to get 100 million new accounts if the system is privatized or partially privatized, earning billions in fees. Wall Street won’t make a dime if the system is preserved as it is. Wall Street firms have poured more than $2 million into the Cato Institute’s Social Security project to sell privatization. Privatization means instead of basing Social Security on work, Social Security would be based on class and luck. In a society where the top 10% get drastic tax cuts and phenomenal returns to their assets while real wages fall for the middle class, the last thing we need is Social Security privatization making inequality worse. Instead, expand the tax base for Social Security, hike the economic growth assumption and gradually increase payroll taxes. And tell Wall Street to look elsewhere for new accounts.