TUESDAY, DECEMBER 11, 2001 — The president’s commission on social security reform released its final report last night. The 16-member panel is set to vote on the document today. Anyone with a passing knowledge of personal finance will be sickened by the recommendations.

Seven months ago, President Bush charged the group to come up with a plan that would allow American workers to invest part of their social security taxes in the stock market. The group, co-chaired by former New York senator Daniel Patrick Moynihan and newly-named AOL TimeWarner chief executive Richard D. Parsons, couldn’t agree on one idea, so they’ve given the president and the public three to chew on for the next seven months or so.

The only thing you need to know about each is that they all require workers to make additional voluntary contributions above and beyond their social security tax to go into government-managed "personal retirement accounts," as the report calls them. (The government would match the contribution -- to the tune of about $40 billion a year.) Why is this bad? Well, workers already have the ability to invest their own money in the stock market. And they don’t need to hand over any more of their paycheck in taxes to the United States government in order to do so. Anyone can open a Dividend Reinvestment Plan (commonly known as DRiPs) and invest in the stock of companies for as little as $10 a month. Only problem is that many people don’t even know such an investment option exists.

Much is made of the notion that these "personal retirement accounts" can "endow workers with a measure of wealth," according to the executive summary of the 165-page report. The commission critiques the current set up of Social Security as a "poor investment." It cynically notes that some workers may die before becoming eligible for their retirement benefits: "For black men age 20, only some 65 percent can be expected to survive to age 65. Thus, one of every three black youths will pay for retirement benefits they will never collect." The report makes passing reference to death benefits, but quickly notes that "many workers die before eligibility for these is established." (Of course, if the Bush administration is truly concerned about the plight of black men in this country, allowing for investment of social security funds in the stock market is probably not the most efficient means of addressing the problem, but that’s another jolt for another day.)

Lost amid the talk of compounding interest, wage indexing, and inflation is the original mission of Social Security. Created in 1935, the program was intended to be a safety net. It was put in place to ensure that every American taxpayer would receive something upon retirement. No one would be left destitute. Now many Americans expect much more from the program. They look at the money they pay into the system -- about 6.2 percent of their wages -- and think their benefits should support a leisurely retirement. (Which is a concept of living that didn’t even exist in 1935.) President Bush has done nothing to dissuade these lofty expectations. Instead, he’s fanned them. As the report recounts, during one of Bush’s campaign speeches on social security, he declared: "Ownership in our society should not be an exclusive club. Independence should not be a gated community. Everyone should be a part owner in the American dream."

Since when has it been the responsibility of Social Security to make retirees financially independent? Never. The program is a safety net, pure and simple. The complaints of the commission that taxpayers cannot pass along their benefits as an "inheritance" are disingenuous. Social security is also a disability and life insurance program. Insurance is a hedge: you pay for a policy that will take care of your loved ones in the event of a catastrophe. If the catastrophe never happens, you don’t get your money back.

American workers who wish to partake of the "American dream" can. Many employers offer 401(k) plans, which allow employees to invest a portion of their income up to $16,500 per year in mutual funds. The money isn’t taxed until it’s withdrawn upon retirement. Investment in Individual Retirement Accounts (IRAs) and Roth IRAs are additional avenues to big savings for post-work life. Yet too few people take advantage of these options.

If President Bush is truly concerned about the ability of every American to look forward to a comfortable retirement, then he should take the estimated $40 billion in additional costs these "personal retirement accounts" will drain from the system and create a program of personal finance education for our public schools.

To be sure, the health of Social Security is in jeopardy. Today, there are only 3.4 workers per beneficiary. By 2016, the money going out will exceed the money coming in and Social Security reserves will be tapped for the first time. By 2038, those reserves will be exhausted. We need real reform: given that Americans live much longer today than they did just decades ago, the minimum age from which benefits can begin should be raised. Given that the program was designed to be a safety net for the needy, benefits for the wealthy should be scaled back.

Instead, we get government supervised investments in the stock market. ("We will establish basic standards of safety and soundness, so that investments are only in steady, reliable funds," the report piously states. For the uninformed, those stock investments are called index funds and no, you don’t need the government to help you get started.) In other words, we get an elaborately designed smokescreen that will divert our attention from the real issues at hand: not enough Americans know how to plan for their retirements and Social Security is a disaster waiting to happen.

But none of these will be debated in the coming days – assuming the commission’s report gets any attention at all amid ongoing coverage of the war on terror. Thanks to the menu of options recommended by the commission, we’ll instead get a mind-numbing debate centered around rates of return, rates of real return, investment options, diversification, and on and on. None of which addresses the real problems with social security.