“I’m not sure the money does come with interest charges when ‘borrowed’ from SS’”
SSA gets interest when they loan excess funds to another agency.
” but even if it is, it’s still not what can be gained with direct investments-”
Again, direct investments in what? Gov’t agencies can’t be buying equity in companies. That makes them a part owner and requires them to vote on directors, potential takeovers, proxy battles. A real can of worms. Equities also take a back seat to bonds in the event of a bankruptcy which is another big reason that gov’t agencies can only buy debt- SS administrators are fiduciaries and cannot risk the money they manage. And companies can go bankrupt. Gov’t agencies can’t.
Investing SS money sounds easy until you start looking at how you would go about doing it. It isn’t easy for even a large mutual fund to invest because their sheer size affects the market they are investing in. Multiply that problem exponentially and you’d have an idea of what investing SSA money would be like.
[[Investing SS money sounds easy ]]
I never said it sounded easy- I can envision a number of issues that would crop up- but you said in previous post that you didn’t think it a wise idea because the money would be going to ‘line someone’s pocket’ (in congress), and one has to ask how using money from treasury bonds isn’t also winding up in congressional pockets as the money they ‘borrow’ goes towards general funds and projects and likely towards special interest groups, who in turn provide kickbacks, perks or whatever after their palms are greased so to speak-
[[That makes them a part owner and requires them to vote on directors, potential takeovers, proxy battles.]]
I don’t know much about how that works, but isn’t there a situation where there are silent shareholders/investors?
[[It isn’t easy for even a large mutual fund to invest because their sheer size affects the market they are investing in. Multiply that problem exponentially and you’d have an idea of what investing SSA money would be like.]]
Provided you invest it all- that would be true- however, even Clinton toyed with the idea of investing a portion of SS in private markets
The way the system stands now, it basically amounts to double taxation- but investing in private would help offset that problem, and possibly give greater retrns
[[Speech by SEC Chairman:
The SEC Perspective on Investing Social Security
In the Stock Market]]
In it He rasies many of the concerns you hav,e but also offers solutions
“Government Influence and the Private Sector
In addition to investor protection and investor education, another aspect of Social Security reform includes the impact of government investment in capital markets.
Those who favor having the government invest the Trust Fund in the stock market point out two major benefits. First, it allows market risk to be spread across society and even across generations. Second, given the economies of scale that the Trust Fund could achieve administrative costs would be significantly lower than for individual accounts.
But, I know some, including Chairman Greenspan, have raised strong objections to the government owning stock in public companies. They point out that this could lead to political interference in deciding which companies to invest in and how those companies are run. Could the government invest in a tobacco company? What about a company that was a toxic polluter a decade ago? More broadly, assuming the government invests in individual equities as opposed to market indexes, would it be able to vote its shares? If so, how?”
http://www.sec.gov/news/speech/speecharchive/1998/spch223.htm
It’s a fascinating article/discussion/read- I can not for the life of me find that other article I mentioned earlier- I believe it was a NRO article discussing ways that the money could be used in private investments - I’ll keep looking htough-