The Mother of All Unfunded Mandates

By Christian E. Weller | April 8, 2005

As the Social Security debate continues, the full costs of Social Security privatization become clear. These could largely come out the pockets of state and local governments, making privatization the mother of all unfunded mandates. Under privatization, workers would have fewer benefits and face greater risks. When Social Security benefits are too little to offer retirees a decent standard of living, governments will have to bail out a privatized Social Security system through new social program expenditures. The vast majority of such programs are the purview of state and local governments. Privatization could thus be a massive unfunded mandate on state and local governments. In addition, state and local spending on social programs would be highly unpredictable, disrupting long-term outlays for roads, schools and other infrastructure projects.

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Christian E. Weller is a Senior Economist at the Center for American Progress.

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