CEPR Testifies Before the House Ways and Means Subcommittee on Social Security

For Immediate Release: June 16, 2005

Contact: Lynn Erskine, 202-293-5380 x 115

Dean Baker, co-director of the Center for Economic and Policy Research (CEPR), today testified before the U.S. House Ways and Means Subcommittee on Social Security on the experiences of other countries that have privatized Social Security systems.

Baker told the subcommittee that: 1) Privatization invariably increases risks for workers; 2) Privatized systems vastly increase the administrative costs of operating a Social Security system; 3) Privatized systems have not proved very popular with the workers they are supposed to benefit; and 4) Financial markets view borrowing to cover transition costs as real borrowing.
He added that private accounts do not by themselves increase national wealth, noting that if Congress intends to redistribute money from taxpayers to retirees, then there are arguably more efficient mechanisms to accomplish this goal.

To read Dean Baker's full testimony, click  here pdf.