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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Road Walker who wrote (212565)	12/6/2004 8:34:29 PM
From: TimF	Read Replies (1) \| Respond to of 1573123

To convince the public that those costs won't matter, privatization advocates are concocting a ruse something like this: Borrow, say, $2 trillion today to establish private accounts No one is advocating borrowing $2tril today. with the expectation that they'll generate such tremendous personal savings that the government will be able to cut future Social Security benefits by an even larger amount and use the savings to erase the debt The benefits would be cut by the fact that the money going in to these "private" accounts would not count towards the amount contributed to the regular SS retirement fund. There is no vague expectation that relies on market return. If the market return is zero (unlikely over decades but it can happen) then when my generation retires will we will have earned 0% on a relatively small fraction of our social security money. I'm not so sure we will do better with the rest of the money because I expect benefits to be cut (at least after the baby boom and if they wait that long the cuts will have to be harsher). Whether it's recorded on the nation's books or not, ever more government borrowing will, sooner or later, reduce lenders' appetite for Treasury debt, forcing up interest rates as the government scrambles to attract the money it needs. That is part of the problem with the current scheme. A lot of the obligation that the Feds have taken on themselves doesn't show up on the books. To the extent that Bush's plan only deals with a fraction of future contributions and payments it doesn't really resolve this problem. It could be argued that Bush's plan is insufficiently radical to deal with the social security mess. Tim