On this day in 2001, President George W. Bush appoints a commission to investigate potential changes to the nation’s Social Security system. The commission was charged with examining the feasibility of unprecedented and controversial changes Bush had proposed for a Social Security system that had been largely unchanged since it was created by Franklin D. Roosevelt in 1935. In an executive order to create the bipartisan commission, Bush wrote that he intended “to preserve Social Security for senior Americans while building wealth for younger Americans.”
Bush proposed changes to Social Security in response to what he and leading economists saw as a looming crisis in the system. As the nation’s large post-World War II “baby boomer” generation retired, more money would begin going out of the system to pay their benefits than would come in from the smaller numbers of younger workers still paying into the system. This would mean, according to Bush, that benefits would have to be cut or taxes raised in order to shore up the system. Instead, Bush proposed to allow younger workers the voluntary option to invest Social Security funds in a “conservative mix of bond and stock” accounts that would generate a higher return than the rate offered by the old federally managed system.
A significant number of critics cited the plan’s potential for abuse. Some Democratic leaders and economic analysts denied that Social Security was about to go bust and assailed the president’s plan as financially risky. Some worried that people would risk their future financial security by making unwise investment choices, similar to “playing the stock market.” Opponents pointed out that the plan would be expensive to implement and also feared it would give the government the power to “raid” excess funds in Social Security to spend on controversial projects.