I'm gonna put myself back on topic:
First, regarding the comments made about personal accounts (that was for you smooth) and the risk of having the money in the stock market.
As I was reading the analysis of the Clinton's 2000 budget (yeah, Saturday night and I am spending it reading presidential budget reports), a paragraph jumped out at me:
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As a third element of its framework, the Administration proposes that one-fifth of the general revenues credited to Social Security, or $280 billion over the 2000-2009 period, be used to purchase corporate equities or other private financial instruments. The dividends earned on the stock would also be reinvested in equities. CBO estimates that by 2009, Social Security's holdings of stocks would be valued at more than $400 billion.
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This was one of Clinton's proposals regarding SS. If a major problem that some people have with privatization is the riskiness of the stock market, where was the uproar about this? I never heard a peep about it.
The only difference with Clinton's proposal and privatization (in regards to the stock market) is who owns the program; me or the government. The obvious next question: Who do you trust more; yourself or the government?
Why do I get the feeling that a lot of the fervor here relates more to the person making the proposal and has little to do with the proposal itself?
Now, there is another little tidbit of information in Clinton's 2000 budget (as referenced above):
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[Social Security trust fund balances] are available to finance future benefit payments and other Trust Fund expenditures--but only in a bookkeeping sense.... They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes
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In short, there isn't any money there. Right now SS is paying for itself in that it brings in more than it puts out. Where does the extra money go? It gets spent. Not just by Bush, but by everybody in Washington going back many, many years.
The guesstimates are that outlays will exceed revenues for Social Security somewhere around 2015/2016.
Then what happens? There isn't any money in the trust fund.
That leaves us with three options:
1) Pay back the IOU's in the trust fund (where is the money going to come from)
2) Increase the tax rate for SS (which would also include raising the cap)
3) Decrease benefits
and a possible fourth: all of the above (depending on who you talk to).
What about all of the "experts" saying there isn't a crisis and that SS is solvent until 2042 or 2055?
They are counting in the ghost balances of the trust fund. The trust fund has a balance, just like any other ledger, but there isn't anything there. The zero balance is offset by the IOU's. Plus, as I understand it, the design of the trust fund isn't such that it would ever hold a balance.
So, unless I am analyzing this information wrong, I am left with the following question:
Why shouldn't we be looking at reforming SS now? Realistically, this should have been done a long time ago. If we wait until the "No Crisis" people tell us it is o.k. to work on the problem, it will probably be too late.
More Info
/please note that I chose my references wisely, no links to Cato, Heritage or whatever.