An April 11 Business story said that President Bush's Social Security proposal "closely echoes" Britain's individual account system.
However, Britain created a decentralized system in which individuals can choose from an almost limitless number of options in which to invest their state pension funds. This program is referred to as "contracting out" and is made up of private accounts in the private sector with private investment firms.
President Bush would create personal accounts within the Social Security system. His reform principles support the creation of a government-administered program that would offer individuals a handful of investment choices in the form of diversified index funds. Unlike Britain's system, the Bush proposal would keep management fees to a minimum and protect individuals from making unsafe investment decisions, while allowing workers to realize the benefits of investing in the capital markets.
Rather than rejecting reform on the grounds that other countries have made unwise decisions, we should learn from their mistakes. By creating personal accounts within Social Security, rather than private accounts as Britain did, President Bush's proposal would do just that.
U.S. Representative (R-Ariz.)
House Republican Policy Chairman