Bush is not proposing that SS gets to share in my upside. My plan potentially would produce a net game to the system, so I think the real cost would need to be discounted for that.

Transition costs should be obvious. Right now, funds paid in go to two places: to pay current benefits and to build up a reserve. If your X is less than the amount that goes into the reserve, you have less in the way of transition costs. If it is greater than the amount that goes into the reserve, then you have to cut benefits to current recipients to fund your private account.

OK, what if the stocks you invest in dramatically underperform, resulting in nothing in your private account - is the answer that you should be left to starve?

Now assume a great depression style crisis happens about once a century. Stocks collapse. Is everyone who retires in the next 10-15 years just SOL?

I'm glad Dad has a military pension.

Dude, it's rhetoric.

I understand all of this, but the main objection to personal accounts seems to be that we borrow lots of money for no net gain to the system. However, if the system were to share in the gain, the calculus is a bit different.

My apologies. It's the guy you are supporting who wants the government to borrow 2 or 3 or 4 trillion.

Question: You said Bush thinks it is morally necessary to provide a safety net (not exactly your words, but close). If private investments turn out to have risk -- obviously they do, but you wouldn't know it from listening to Bush -- then what happens to the people on the downside of that risk? Are they just fucked, and will the Republican Party that you say will still be in power 25 years from now have the political will to say that they are fucked?

I think Sidd meant: Aren't they commies too, rhetorically speaking?

In other words, the government should invest in the stock market?

Commie.

Even under the Bush plan, as I understand it, the permitted investments narrow as you get closer to retirement, so that you are only permitted to invest in "safe" investments.

You're dad's pension, in all likely hood, is invested in the market.

No, I object to borrowing a ton of government money. Make the modest fixes to Social Security to ensure it continues to do what it does. We have private accounts now. People who want more money -- including most of us -- can go to Schwab or Fidelity and open a private account. You don't have take money away from Social Security to allow this happen.

I don't think this is a real risk, given that a very small portion of our total retirement pool will be permitted to be in private accounts.

No, I should invest in the market.

The government already does invest in the market via management of pension accounts.

It's also used to fund government operations, magically reducing the deficit because it's not counted as part of it. (Does anyone remember who recently said that the 2-4 trillion Bush wants to borrow shouldn't be considered "debt" or "deficit", because it was really a "savings"?) This may explain why Bush wants to postpone PRAs until after his term ends -- he's not prepared to accept the immediate bloating of the deficit that will come, before a single penny of the 2-4 trillion transition costs is spent.




This explains the gleam in her eye when she saw my Kraut car.

That is a reasonable objection. Would you also support increasing the 401(k) and IRA limits?

Ah, the conservative wish-think. Let's just pretend the risks aren't real.

But, clubby, risk and reward correlate, don't they? If they didn't, wouldn't we all move to nothing but the high reward investments?

(I'll note that the above correlation isn't exact and may point to one potential "fix", but a "fix" that, as Burger noted, isn't permitted because it would be communistic -- generally, a well diversified portfolio with part equity and part debt has both a higher return and a lower risk than an all debt portfolio, which is basically what SS is invested in; we could lower risk and increase return by letting the current trust fund invest in a portfolio of 20-30% stock).

Maybe. How do you propose to make up the lost revenues?