Media Release

Will States Opt Out of Social Security?

Oregon is first to seek waivers

The Oregon Legislature became the first in the nation to recognize that reforming Social Security may best be done at the state level. Oregon's House and Senate approved Senate Concurrent Resolution 2 on May 5th asking Congress to enact a waiver system so states can design and implement alternative retirement plans for all workers. Everyone would thus be able to opt out of Social Security and save for their own retirement. The waiver process was first proposed by Cascade Policy Institute in June, 1996 when it sponsored a talk in Portland by former Chilean minister of labor and social welfare José Piñera. Dr. Piñera privatized Chile's Social Security System in 1981, and is now working with the Washington D.C. based Cato Institute to help other countries reap the benefits of such plans. "Most younger workers worry that Social Security won't be there when they retire. Many older Americans share that concern for their children and grandchildren," stated Steve Buckstein, president of Cascade Policy Institute. "We must develop alternatives that allow current retirees to be secure, while letting their children opt for fiscally sound retirement alternatives."

"States are proving quite innovative in their approaches to improving upon other federal government programs such as Medicaid and Welfare," Buckstein said. "Oregon has been a leader in these two areas, receiving federal waivers for the Oregon Health Plan and the JOBS Plus welfare-to-work program. Now, the Oregon Legislature is asking Congress to give every state the opportunity to design its own retirement system." Such an option has existed in the past, but only for certain classes of public and private employees.

Social Security is no longer the "third rail" of American politics. It is on the table for serious discussion. Several national organizations are designing private alternatives to Social Security. Cascade Policy Institute is designing a new Oregon Option which will give every worker the right to invest for his or her own retirement. According to Buckstein, "We believe many younger workers will jump at such an opportunity. Current retirees will support their choice as the best way to move away from a system destined to become insolvent early in the next century."

"The benefits of such an option could be tremendous," advocates Buckstein. Based on experience in other countries such as Chile, America's savings rate could skyrocket, and the economy could grow substantially. American municipal workers allowed to opt out of Social Security prior to 1983 have also realized the significant advantages of private, fully-funded retirement systems.

"It's time for all Americans to talk about alternatives to Social Security," says Buckstein. "Oregon is the first state to ask Congress to begin this discussion. We expect other states will follow. Together, we can develop plans that give all Americans the retirement choices they want and deserve."