There is a good point at the end of Josh Marshall's post below. If the individual can put the majority of their tax responsibility into private accounts, how long will it be until the drumbeat starts up that the employers should be able to do so as well. If that passes as well, then the entire system changes. It is no longer SS as we know it, a pay-as-you-go system that ensures some modicum of income for retirees, to a government administered 401k program. If the true soul of the conservative yearns for a smaller, less-intrusive goernment this is the exact opposite what should be done. In fact, the Social Security program as it stands today is a model of efficiency and good planning.
Predicting the future of social security is almost an entirely demographic exercise. Cross that with DGP and employment growth and you can make some pretty trusty estimates. There are no fluctuating P/E ratios, stock bubbles, or corporate malfeasance that can potentially wipe out trillions of dollars of value when it comes to the Social Security system. Its security (hence social security) rests on the stability and existence of the government.
As my father insisted, there is no physical money in a box someplace. The surplus tax revenue is invested in Treasury Bonds (which are as good as gold. Via the Constitution: 14th amendment: Section. 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned) and until it is necessary to start cashing those in, the currently employed subsidize the retired.
Given that there is no actual "SS account" it can not be bankrupt. The only way in which the SS system can be bankrupt, which the President claims will happen, is if the government goes belly-up. The surplus can and will be used up, but that is exactly why it was created in the first place. The surplus was created to be there when the boomers begin to retire so that if the system was unable to cover the outlays, there would be money backing it up. The actual depletion date of the surplus (currently at 2042) keeps getting pushed back as the actuaries make adjustments for economic growth and demographic changes.
Government sponsored savings incentives already exist. The reason people don't save at the levels they did in the 70's and 80's is because through the 90's borrowing accelerated like never before. The average family carries thousands in debt. Deby isn't inherently a bad thing, but the financial maintenance on debt can drain any extra income.
The administration needs to come clean on this entire effort. There is a deliberate deception going on here. There is no "crisis" and the money is there. President Bush talks about the system as if there is no money there because it is the form of Bonds. Given that every day billions change hands every day in the bond market, I think anyone with one iota of experience looking at economics and the market system will tell you that it is nonsense to say the money isn't there. The administration is deliberately counting on the inexperience of the average voter to pass this structural change. Bush's own chief strategist said that to get this past will require convincing the people there is a crisis.
If the administration is truly interested in ensuring the stability of the SS system he should do as least as much as Reagan was willing to do which was to establish a non-partisan panel of experts to examine the options, not simply push through an ideologically motivated effort ("I don't need to tell you that this will be one of the most important conservative undertakings of modern times," Peter Wehner.).
54 minutes ago