Replies

Yes, but wouldn't it be better to actually hurry SS on to it's well-deserved demise? If there is not enough SS tax income to cover SS obligations to retirees around 2018, then encouraging people to put their SS taxes into private accounts, rather than into the SS trust fund, would make the shortfall worse. The worse the shortfall, the sooner this socialistic transfer of wealth from the lucky rich to the unlucky poor can be put behind us. President Bush is a lot smarter than liberals give him credit for being.

I agree, I was just making an off the cuff"remark. Private accounts are brilliant. However, I don't think it'll work quite like you say. The shortfall would be covered by the so called transition cost ($2 Trillion?) so the demise of the traditional SS system would still be delayed. The thing about private accounts is that they end the "rob Peter to pay Paul" Ponzi scheme cycle. Once that door is opened, we can eventually move to stop forcing people to participate.

Alison Acosta Fraser at the Heritage Foundation Website says:
"The truth is that a system of personal retirement accounts will involve up-front transition costs, but it will actually save money in the long run."
These upfront "transition costs" will make the socialist boondoggle look more like, well, a socialist boondoggle. The government will need to borrow money to pay off these obligations for several decades that it will not be able to get from social security taxes.
Harry Binswanger in Capitalism Magazine (In Defense of Individual Rights) says, "The only difference, in the short term, is the means by which the blood-letting is accomplished: without privatization it's done by Social Security taxes; with privatization it's done by lower Social Security taxes and higher borrowing and/or inflation."; He says, "There are no "transition costs" in this picture." There are, as he would say no additional transitional costs. There would simply be less transitional income. And there would, as he says be "blood-letting". His suggestions on how to let the blood are for the government to borrow money to pay the SS obligations, or to simply run at a deficit and allow higher inflation, further sticking it those old people milking the system who we want to get rid of anyway. Thomas Saving defending the president’s SS reform plan says, "In a sense, a transition to benefit prepayment does not generate any additional costs, but only brings forward the pain of paying off the existing debt."
So we win. The system struggles in the short term, looking worse, and losing support. But there are fewer obligations in the long term. Then we can end, as Binswanger calls it, "welfare for the aged". No more stealing from productive young to subsidize unproductive old.