Nadine, If a pension fund offered the same rate of return and benefits which our government social security system does. The people running it would be placed in jail by the securities exchange commission for fraud. Social security is not an investment plan.
That's what President Bush is trying to accomplish, he's trying to move social security from an insurance program (which it was originally designed to be), to a modest investment plan.
There is a good reasons dozens of countries around the world have shifted to personal retirement accounts such as the one Bush proposes. They made the change, because private accounts are the best way of providing security and comfort to the elderly long term.
Additionally, they realized it’s a good way to save money. Reforming social security, by moving toward partial privatization, is similar to refinancing a house when interest rates are down. It may cost a little more money in the beginning to ensure full benefits for retirees, much as a family might pay points and other closing costs to get a new mortgage. But taxpayers will save a huge amount of money when Social Security becomes self-financing, just as families can lower their long-term costs with lower-rate mortgages.
Perfection of how the numbers add up should be weighed against what will happen if nothing is done. And make no mistake, a demographic train wreck is about to hit us. What answer do you or the Democratic party propose?
The demographic case for reform is profound. We can either dramatically:
1. Cut benefits.
2. Raise the age of eligibility.
3. Raise taxes on the young to pay for the massive elderly population coming our way.
Or, partially privatize social security, while balancing a choice between the three.
In twenty or thirty years, if we allow young people to invest a portion of social security in private accounts, perhaps we won't need such large entitlements. After all, if you're a millionaire, would you care as much about a change in the age eligibility?
I doubt it.
Michael |
