"If an Individual Chose a Private Account in Social Security Under the President's Plan and The Account Performed Poorly, Would They still Receive Their Full Guaranteed Benefit?"

Regardless of How the Account Performed, Individuals Would Still Be Subject to a Cut in Benefits and the Privatization Tax. The GOP plan will cut benefits by tying benefits to the rise of inflation instead of to wages, meaning that seniors would not share in our nation's rising standard of living. Bush advisor Peter Wehner writes, "We simply cannot solve the Social Security problem with Personal Retirement Accounts alone….to wholly ignore the matter of the current system's benefit formula -- would be irresponsible." The accounts will also be subject to the privatization tax. A Senior Administration Official briefed reporters before the President's State of the Union Address and described the tax. He said, "…in return for the opportunity to get the benefits from the personal account, the person foregoes a certain amount of benefits from the traditional system. Now, the way that election is structured, the person comes out ahead if their personal account exceeds a 3 percent real rate of return, which is the rate of return that the trust fund bonds receive." [Memo on Social Security, Peter H. Wehner, Published in the Wall Street Journal, 1/5/05; White House Office of the Press Secretary, Background Press Briefing on Social Security, 2/2/05]