Just to throw a grenade into this discussion of the privatization plan: who says that the "accounts" somehow create less government liability than the current "notes" arrangement?
Regardless where the ficticious accounting assigns funds (to T-Bills rather than stocks/bonds), it makes no difference on the input side - those funds are still a demand on the treasury. I.e., another trillion or twenty trillion in new debt to meet payouts is still new US debt, that must be met with taxes or inflation (or both).
It appears the only way to make a difference is (a) IF the claim of greater ROI actually comes to pass, (b) AND IF THAT GREATER ROI IS USED TO REDUCE LIABILITY (both need to be true) of either the individual or the general fund.
Now, think about it - how could the greater ROI do that?
I can think of only three ways:
(1)reduce individual benefits by means-testing beneficiaries so the more successful investors are taken off SS when their accounts rise to a certain level, or
(2)reduce everyone's benefits pro-rata
(3)investment benefits to the general fund, not individuals.
(IMO, SS should be means-tested anyway, as long as it's not a true insurance plan. I haven't seen stats on means-testing, altho' it's a favorite issue of mine - I remember addressing a large group of several hundred seniors and asking for a show of hands for means-testing SS... probably 10% raised their hands.
If there were honesty in government and accounting, there would be many more, once it were known the benfits in some cases greatly exceeded payments, AND if retirees were confident in the fiduciary intentions of government. That is to say the least, uncertain in most minds.)
Bottom line, it's not as if we get some portion of SS funds to invest as we wish, to increase our benefits and benefit the Treasury. It's likely either to be spread over the entire stock market, or if individuals do their own choosing of which equities to invest, they'll be means-tested and cut off above some point.
Better to have a real insurance plan, and a separate real benefits plan, both with clear accountability, and take remove this as an bi-annual political football. |
