Deinonychus antirrhopus

"I put quotes around private investments as it is not like the individual will have complete choice over where to invest his/her funds. They will still be largely controlled by the government."

Which could be worse than Social Security as we know it. Some group of bureaucrats is going to have the power to put stocks on and off the approved investment list, and given the amount of money involved, this is just asking for shakedowns, payoffs, etc.

How about this: we index benefits to prices, not wages. Over several decades, it could make a big difference.

Actually I think it will be more of a choice between various index funds, not a specific stock or bond.

The plan also calls for the indexing of benefits to prices vs. wages as well.

The whole Social Security is in trouble meme just makes me bust a gut. The surpluses in the payroll tax have been used to pay general revenue items since the Vietnam era (and masking the true size of the deficit), once the surpluses in payroll tax revenues disappear there are more then a few will to claim the system is “insolvent”.

For starters why don’t you all start demanding that SS be taken off budget? This will do two things; first it will help us all see the true size of the deficits the government is running, second it will show that the SS system is really not in that bad off. The payroll tax surplus is being spent, in part to give income tax payers a cut (it’s really a loan but why quibble), Why is this egregious wage redistribution not being fought against by people like you Mr. Varden. Or am I wrong in that you do speak out forcefully against this bit of redistribution?

Privatized accounts eliminates the Insurance scheme of SS, in which bad expenditure decisions by individuals will not leave without living potential. It will again be the uninsured individual trying his best to reach retirement with some wherewithal for a life.

I have proposed the SS Fund be altered to a national banking system, utilizing as Reserve those Treasuries which the Government claimed were issued when the SS Tax revenues were spent in the General Budget. Purchase of existent banking systems (private) could be possible, if purchase payment would be taken in Treasuries.

The SS Fund banking system would be entailed to cash out all Treasuries holdings when they come due. The Fund would be entailed with payment of all SS benefits and Medicare claims, but would receive all SS tax revenues, and could increase Capitalization through investment of current surpluses in revenues. Commitment to banking law in risk banking would minimize operational risks, and maximize potential returns--expecially without the Investment charges innate to Privatizing accounts. lgl

The goal may be to return the system to balance, but it's hard to see how private accounts do that. SS is out of balance now, and if you reduce both revenues and benefits, it stays out of balance. The only way to fix it is if benefits are reduced even more than they need to be just to make up for the private investment. In other words, we're right back where we started unless you assume unrealistic levels of return for the invested money.

Besides, what's the point? If we're going to give back two percentage points of payroll taxes to individuals (the most commonly disucssed plan), why should the feds invest it? Why not just reduce SS taxes and let people do whatever they want with the extra money?

Of course, that begs the question of why we should stop at only two percentage points? Why not just eliminate SS and let everyone invest their money however they see fit? Hmmm....

(BTW, Steve, since you're such an avid reader of my site, I'm sure you're aware that I've addressed the SS deficit multiple times in the past few months. It just wasn't the point of my most recent post, that's all.)

In other words, we're right back where we started unless you assume unrealistic levels of return for the invested money.

Uh, all you have to do is to assume that the S&P 500 index will outperform Treasury Bonds. Why is that so unrealistic?

The only way to fix it is if benefits are reduced even more than they need to be just to make up for the private investment.

And, of course, this is one thing that people will voluntarily be willing to do -- reduce their future benefits by a bit more than the tax revenues that go into them. You have to remember that a good proportion of people are going to be getting zero net return on Social Security in the future (or negative). It's not hard to see how they might want to "buy out" of the system on terms favorable to both the government and the private citizenry.

Why not just reduce SS taxes and let people do whatever they want with the extra money?

It's called the "Samaritan's Dilemma" for a reason.

Why not just eliminate SS and let everyone invest their money however they see fit?

The idea is to help the system move toward solvency, not gut the entire idea of benefit-redistribution to the poorer members of society.

....

Rick ... For starters why don’t you all start demanding that SS be taken off budget?

It IS off-budget already.

The surpluses in the payroll tax have been used to pay general revenue items since the Vietnam era (and masking the true size of the deficit)

Not really. The increase in Social Security Surpluses happened as a result of the Greenspan Commission reforms. If you look at the FY2005 historical budget tables, for example, you'll find a more than 7 billion dollar deficit for 1982 in Social Security and off-budget items. Starting in 1983, however, the program began to systematically run surpluses.