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"None of us is a current standing politician," Mitchell
says of the commission, which is co-chaired by former
New York Sen. Daniel Patrick Moynihan, a Democrat,
and Richard D. Parsons, co-chief operating officer of AOL-Time
Warner, a Republican. "I myself have no interest in
becoming a politician. Economists tend not to make good
politicians. I think that we were selected because we have
the ability to look both at the financial and the overall
welfare equity issues and not necessarily be focused on what
will this Congress in this year be able to pass or not pass."
In the end, she says, "the president still has to stand
behind a plan, assuming he wants to go forward with it. So
ultimately whatever gets brought to the floor of Congress
will be a political decision. I think we have the need to take
the long view and focus on the big questions."
The commission, in coming up with suggested revisions
to Social Security, must adhere to six guidelines laid out by
the White House in restoring fiscal soundness to the system:
benefits cannot be changed for retirees and people soon to
be retired; any Social Security surplus must be earmarked
solely for Social Security; payroll taxes cannot be increased;
the government must not invest Social Security funds in the
stock market; Social Security's disability and survivors insurance
program must be preserved; and reform must include
"individually controlled, voluntary personal retirement
accounts that will augment Social Security."
The last charge is the one that has drawn the most controversy.
"With this commission, it's the first time that
private accounts have been talked about at the federal level
in the history of Social Security," says Mitchell.
Last summer the panel came under fire. Rep. Richard
Gephardt (D, MO), the House minority leader, called for
creation of a new commission because he said the existing
panel was made up of people who were predisposed to supporting
Bush's plan to partially privatize the system. Others
criticized the commission for trying to frighten people into
thinking that the system is in worse shape than it is.
Mitchell dismisses those criticisms, but otherwise works
hard to stay above the fray. She is not bashful, though, about
discussing the problems with, and misconceptions about,
Social Security that must be addressed. One of the biggest
mistaken beliefs: All of us have Social Security accounts with
our names on it in Washington. Many people do not realize
that Social Security is a pay-as-you-go system, which means
current payroll taxes are used to pay benefits for today's
retirees. Another thing many have difficulty grasping: the vast
sum of money that will be needed to fund the system in years
to come, as the baby boomer generation retires, and fewer
workers are available to pay Social Security tax.
"The Social Security system has an unfunded liability —
that is, promises have been made to workers, but there's no
money set aside to pay those promises," Mitchell says. "Any
money that we pay retirees — current retirees or ourselves in
the future — has to be taken out of the tax revenue."
In a study entitled "Social Security Money's Worth,"
which was published in her 1999 book Prospects for Social
Security Reform, Mitchell measured how big this unfunded
liability was and put it in terms that most people could
understand — $70,000 per person working today. "In other
words," she says, "if we could imagine moving the system
to immediate solvency, each of us would have to put up
$70,000 today, and we would have to start afresh saving for
our retirement. That's a big number."
If nothing is done to change the system, Mitchell says,
the government will have to start cutting benefits to recipients
in about 2038 because payroll tax revenue will not be
sufficient to pay those promised benefits.
"I think what the commission will probably end up doing
is offering options. We may say, 'We favor this one,' or we
may not. I don't know yet what we're talking about in terms
of the final outcome. But we'll have a few options that meet
the guidelines, and then we'll say, 'These are the possibilities,
and they all are fiscally sustainable, and they all have an
individual account, and they all do the things they're supposed
to do.'"
Mitchell declined to be specific, but she said that she
personally favors allowing workers to invest in Treasury
Inflation Protected Securities, known as TIPS. "They're basically
inflation-protected bonds. This is one possible element
of the investment portfolio in these individual accounts. You
might live 30 or 40 years in retirement, and that means inflation
risk is one of the chief concerns that retirees have. I
would like to see those inflation-protected securities play an
important role."
Serving on the commission has been a time-consuming
– but rewarding — task, marked by months of meetings of
commission members and public hearings.
"We've had people in to talk to us in a formal way at these
hearings," Mitchell says. "We've also had input from literally
thousands of other people" in the form of e-mail and
letters. "Every week, I receive probably two inches of e-mail
that has been submitted to the commission."
The public hearings were filled to capacity and drew a
lot of press coverage.
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