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"Every one of our public meetings has been full — all 16
of us and all 350 chairs in the audience, in addition to
Bloomberg, C-SPAN, CNN, ABC, NBC, CBS, plus
demonstrators outside, plus a whole variety of different
interest groups. When they say public, they mean public.
As an educator, I saw that one of the big reasons to be part
of this panel was to inform the public about the challenges
the system faces and how different solutions are going to
lead to one set of outcomes versus another set."
Mitchell says her understanding of the issues surrounding
Social Security has been strengthened by her
research and consulting on retirement systems in other
countries. Most recently, she has worked with the Mexican
government to assess its social security reform, with Brazil
to help bring public sector pensions to fiscal sustainability,
and with Japan on a project on learning how to cope
with the challenges arising from aging populations in developed
countries. Mitchell also has taught pension courses
in Sri Lanka and India and worked with the Australian pension
industry to learn about pension structure and administrative
costs.
Mitchell feels comfortable traveling abroad. Her father
served with the United Nations, and she spent many
years living in Pakistan, Italy, Peru, Chile, Brazil, Colombia,
and Mexico. In descending order of fluency, she speaks
Spanish, Portuguese and French.
How soon should Congress enact Social Security
reform?
"Yesterday," Mitchell says emphatically. "I think that
every year we let go is another year that we face substantial
insecurity. What I see as the most troubling outcome
of all is that Congress doesn't act and just lets things drift
along until a true crisis emerges when we're all 80 or 90
years old. The most responsible path is a plan that puts in
place some reforms now. The system faces huge uncertainty.
We might be around in 2038, and we might not be
healthy. We might not be able to work. We might not have
all our faculties. Who knows what will happen? It's better
to make the changes now that put the system on a strong
keel than to wait until we're very frail and not really able
to have many alternatives."
As challenging as Social Security is, there is another
looming crisis that also must be addressed.
"I think that Social Security is currently a very contentious
issue, but what worries me is the 800-pound
gorilla in the background, and that's Medicare," says
Mitchell. "Medicare is stumbling along. It's facing huge
financial deficits — certainly within the next decade and
probably sooner than that, maybe in the next five to six
years. What concerns me is if we don't fix Social Security
now, there's going to be no money left over once we focus
on Medicare. I think that's going to be a grave crisis. I
think you will see people not getting treatment, dying of
heart attacks. That's going to command empathy and will
need to be fixed. If we don't fix Social Security now when
we're still not in the Medicare thicket, we're going to be
in trouble later."
As for her own retirement prospects, Mitchell seems to
have planned well. She never did follow the advice of the
co-workers at Cornell, who suggested she opt for an asset
allocation of 50 percent stocks and 50 percent bonds.
Mitchell decided instead to put all of her retirement contributions
in stocks. Even after switching employers, she
kept all of her retirement money in equities from 1978
until 1999, riding the greatest bull market in history.
In 1999, she decided to move all that money out of
equities into TIPS. She says she began to grow cautious
about stocks while attending a dinner sponsored by the
Wharton Financial Institutions Center. The center's director
at the time was finance professor Anthony Santomero,
who is now president of the Federal Reserve Bank of
Philadelphia.
"After dinner," Mitchell says, "Tony had this custom of
going around the table and asking everyone 'What's on
your mind? What's bothering you? What concerns you for
the next year?'"
As everyone spoke, it became clear to Mitchell that
there was more than a little pessimism about stocks. "After
that dinner, I went out and said to my husband, 'I think
it's time to get out of the stock market.' And I had done
nothing for 21 years prior to that! So I guess I have to
thank Tony."
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