Just wondering …
Is there anyone willing to admit that, just a few months ago, they thought investing Social Security money in the stock market was a good idea?
Well they were right. Right now is the perfect time to invest in social security.
You might think the whole “buy high sell low” is good, but not me:)
I’m just wondering how many people thought a “Lockbox” would solve any problems… 
Per mutual funds for dummies the stock market on average has returned 12+% per year, including the great depression.
I am a big fan of the idea of privatization of retirement benefits. If I could put that extra $20 a check in my 401K I would be a happy guy.
Even though many companies are being clubbed like baby harp seal right now on the market, companies like mine (Scholastic) are doing quite well due to fears of dot com failures and our “non tech” orientation.
http://finance.yahoo.com/q?s=SCHL&d=2y
There is always a way to make money on the market, just have to know where to find it.
The lower this market goes, the more sense it makes. I am buying aggressively right now–I wasn’t buying a thing at the beginning of 2000. I’ll tell you what I’m NOT buying: U.S. Treasuries.
The lower the market goes, the better deal privatizing social security is for tomorrow’s retirees. And the more volatile the market is, the better, because of dollar-cost averaging. Because contributions remain fairly constant while stock prices vary, relatively few shares are purchased expensively, while when prices are depressed, as they are now, many more shares are actually bought. The more volatile the market, the more beneficial the effects of dollar cost averaging.
Ironically, the more sense privatizing the surplus makes, the harder it is to sell, politically, because most people are pretty ignorant when it comes to investing. The masses sell low in a panic, and buy high in a mania. This is why ‘bullish sentiment’ and ‘bearish sentiment’ are contrary indicators. Meaning the professionals look at a bear on the cover of TIME magazine and take it as a big fat ‘buy’ signal.
Conversely, during a mania such as we had in 1999 and early 2000, buying stocks is a stupid idea. But privatizing social security is a relatively easy sell, because people are enthusiastic about stocks.
Well, buying stocks during a mania is a stupid idea–unless you’re dollar-cost averaging. Dollar cost averaging is a great idea.
On a related note, can anybody explain to me why anyone who seriously proposes a “lockbox” which congress can’t spend while simultaneously opposing any efforts to privatize the surplus --such as Al Gore-- isn’t ignorant or lying? What was he planning to do with all that money in the lockbox, anyway?
pman2: The lower the market goes, the better deal privatizing social security is for tomorrow’s retirees.
Today’s retirees, on the other hand—i.e., those who need to draw upon their retirement savings just at the time when the market is seriously depressed and the value of their investments is reduced—get the shaft in a privatized system. You may be chuckling with glee at the prospect of what you expect to get from your current bear-market purchases a few decades from now, but sixty-five-year-olds looking at their diminished portfolios are not smiling much. If all their retirement income including SS benefits had taken the same hit, they’d have even less to laugh about.
And while it’s true that private investors are encouraged to shift away from volatile stocks to more secure investments as they approach retirement, that just moves the problem back a step: lots of people will reach the point where they’d like to shift out of stocks during a market downturn, when they can’t move to lower-return investments without losing money they need. Basically, every “tomorrow” is somebody’s “today”: i.e., if retirement benefits are completely privatized, there will be people needing to start selling their stocks at every point of every market cycle. Those who reach that time of life just after a market crash are extremely screwed, and it won’t help them much to know that what’s bad for them is good for “tomorrow’s retirees.”
And that doesn’t even take into account the fact that administrative overhead for privatized retirement investment is significantly greater than that for Social Security, nor that most privatized plans reduce or eliminate the progressivity of benefits. No Elvis, pman2 may be right that the overall desirability of SS privatization doesn’t depend on how high or low the market happens to be right now, but you’re right that in general, it’s a seriously flawed idea.
Kimtsu:
<<those who need to draw upon their retirement savings just at the time when the market is seriously depressed and the value of their investments is reduced—get the shaft in a privatized system.>>
Not by a long shot.
No one is proposing that the entire portfolio of treasuries in the SSA be dumped all at once and replaced with stocks. We are currently in a position to guarantee current benefit levels as a minimum floor, through the purchase of annuities.
Anyone has the option of staying in the SS plan as is, anyway (although with a modicum of good advice, why anyone would, even if he were retiring tomorrow, is beyond me.)
Anyone retiring today, or in the next five years (It takes 5.3 years or so on average, for a bear market to recover to peak levels, measured from trough to peak, according to data provided by Fabian.com) will get the full benefit of his lifetime contributions.
Further, with the stock market doubling, on average, every 7 years or so, it wouldn’t take that many years before even an unprecedented 90% drop in equity values would still provide greater benefits than treasuries doubling every 12-15 years.
How many years? Well
I should also add–regarding Kimtsu’s point, the following:
Suppose we convert to a private-investment model of social security today. Suppose, also, that Harry, a 64 year old janitor who’s contributed his entire life, is going to retire in one year. Suppose, also, that the market takes a 50% dive this year, right before Harry’s retirement.
Harry has another 10-20 years of life left, on average. Under the Bush plan, He only contributed 1/6th of his payroll tax for one year to his private account. If he’s been contributing for 40 years, that’s just 0.4% of his portfolio. So if he takes a 50% loss on that, his whole portfolio takes a 0.2% loss, assuming the treasuries in the SSA account stay even. Hardly a devastating loss.
Plus, Harry still has a 10-20 year time horizon before he needs that money. He doesn’t have to sell those shares if he doesn’t want to. If he doesn’t tap it, and can hang on just 5.3 years on average, plus another couple of years to catch up with the yields on the treasuries he would otherwise have bought, he’s actually better off than he would be under Social Security. If he dies first, it goes to his heirs, where it has another 20-30 years to compound before they retire.
This idea that privatizing Social Security will somehow hurt the elderly or current beneficiaries just doesn’t hold water.
Capital preservation is a critical aspect of near retirement investing, you take your chances when you’re 20-40. With proper portfolio management, older investors could be selling stocks at a profit and rolling the funds from those into safer investments so they will have a retirement. If you play games with your retirement funds at 60 you get what you desrve.
these guys might disagree with that.
http://www.vanguard.com/about/1_2_4.html
I am having trouble locating a cite on SSI’s budget/payout ratio.
I’m sorry I dont understand this…what exactly is progressivity of benefits?
How much appreciation of assets do we see in SSI? In a private retirement fund there is no theoretical or actual limit to your potential income. Your descendants can recieve your unused funds in the event of your death before they run out. Even if you die before retirement, no matter what age your descendants.
Maybe privatizing Social Security is a good idea, maybe not. I’m still trying to make up my mind on the subject, myself.
However, to answer the OP, I always thought that the push to privatize was classic top of the market behavior. A few sobering statistics on the stock market:
According to Ibbotson & Associates, the people who keep all the total return data on the stock market going back to 1926, there have been two periods when the stock market went for very long periods of time returning nothing on an inflation-adjusted basis: 1928 - 1943, and again from 1968 to at least 1981 (my table comes from a book, Stock Market: Theories and Evidence, that only has this updated through 1981), although I did a calculation back when I first read this book and figured that it did finally and permanently surpass its 1968 inflation-adjusted level in 1983.
So, twice in the past century we had long periods of time when stocks went nowhere, the first time for 15 years, and the second time, again, for 15 years (assuming my calculations are correct. If anyone has later and better data, feel free to post it.)
So much for the mantra you keep hearing that stocks always do better than whatever else the person is comparing it to over any five year period. This is, not to put too fine a point on it, a lie.
That said, it’s also true that stocks are good retirement investments. Just be prepared to start pruning them from your portfolio 15 years before you intend to retire, if you truly are planning to live comfortably at that time.
And given the bubble behavior we just went through, when none of these facts were cited by anyone, how can anyone seriously and with a straight face say that the average person would have the skills and the knowledge that he/she needs to properly manage a portfolio?
Okay. You didn’t make it clear at first that you were talking specifically about the Bush plan, but I’m happy to adjust my comments accordingly.
*No one is proposing that the entire portfolio of treasuries in the SSA be dumped all at once and replaced with stocks. We are currently in a position to guarantee current benefit levels as a minimum floor, through the purchase of annuities. *
Where is the money to come from, though, for simultaneously paying guaranteed benefits to current retirees (for which the present SS system relies on current payroll taxes) and also letting workers start paying part of their payroll taxes into a private account? In addition, isn’t conversion of investment accounts into annuities kind of expensive? Way I hear, it costs something like 4–6% of the total value of the account, which is much more than the comparable administrative costs for SS benefits. That money’s gotta come from somewhere too.
*Suppose we convert to a private-investment model of social security today. Suppose, also, that Harry, a 64 year old janitor who’s contributed his entire life, is going to retire in one year. Suppose, also, that the market takes a 50% dive this year, right before Harry’s retirement.
Harry has another 10-20 years of life left, on average. Under the Bush plan, He only contributed 1/6th of his payroll tax for one year to his private account. If he’s been contributing for 40 years, that’s just 0.4% of his portfolio. So if he takes a 50% loss on that, his whole portfolio takes a 0.2% loss, assuming the treasuries in the SSA account stay even. Hardly a devastating loss.*
Right, because most of his portfolio is not in private investment. My point was that once the system has been privatized for many years so that many people do have a lot of their portfolio in private investment, market crashes really can do significant damage to their retirement resources. Consider Harry’s grandson who gets his first job the year that the system is privatized, and contributes a sixth of his payroll tax to a private account every year for forty years. That private account is a pretty hefty part of his total portfolio, and if he takes a 50% loss on that during a market dive, he’s lost a lot.
And, of course, that assumes that his investments have done even as well as the market average up till that point. Some people’s will do better, of course, but some will do worse. The rate of return on the SS Treasury bonds is not very exciting, but at least everybody manages to achieve it. We can’t compare the performance of a privatized system to that of the current system just “on average”; we have to take into account the significant social costs of the fact that many people won’t achieve the average. These are not offset by the fact that many people will surpass the average; the problems of having more poor people aren’t negated by the advantages of having more rich people.
But even if we do just consider average performance, we’re still not all that safe from severe fluctuations:
*Further, with the stock market doubling, on average, every 7 years or so, it wouldn’t take that many years before even an unprecedented 90% drop in equity values would still provide greater benefits than treasuries doubling every 12-15 years.
How many years? Well *
Your post seems to have been cut off here, so I’m not sure what you were going to say. But I’ll try to continue the same line of thought: let’s say that stock values dependably double every seven years, while T-bonds double only half as often, every fourteen years (both of which assumptions are somewhat generous to your argument). Now, if both the private account and the SS account start out with the same amount x of investment, I make it that after six seven-year periods or 42 years, the stock investments will have grown to 64x while the SS investments will only be at 8x. But if we hit a 90% drop in the market at that point, the stock portfolio will fall to 6.4x, less than the slower but safer SS accumulation. So even in 42 years, close to the duration of most people’s entire working lives, a 90% drop in equity values would still more than wipe out the advantage of stock investing. Of course, as you say, such massive crashes aren’t likely; but smaller crashes have a negative impact as well. A 75% drop would wipe out the stock-market advantage from a 28-year period, and a not-at-all-unheard-of drop of 50% would wipe out the advantage gained over 14 years. And again, that’s assuming that the investor manages to do as well as the market average.
Moreover, privatization has the effect of time-limiting part of one’s benefits. Social Security benefits are paid at whatever level you’re eligible for until you die. Private investments, on the other hand, keep paying till you run out of money and then that’s it. If you live long enough for your own investments to poop out on you, and your SS benefits have been reduced because of privatization, then you’ll be worse off than you would have been under a non-privatized scheme. Yes, “on average,” people will live about the amount of time that their investment plans have calculated to provide benefits for, but again, that doesn’t solve the problems of the people who don’t meet the average.
See, I think the biggest problem with plans to privatize Social Security is that they compare apples and oranges. Privatization enthusiasts evaluate SS and the stock market as investment options, and compare how well the average investor would do in each case. Social Security as it stands, however, is really a social insurance program, where your payroll taxes serve more or less as “premiums” that do not entirely determine the amount or duration of your benefits. (SS also handles other kinds of social insurance in the form of paying out lots of disability and survivors’ benefits, which privatization advocates don’t consider when criticizing its performance solely as a retirement investment plan.)
Private investment is about making wise choices based on expectations about the average result, and that’s fine. But social welfare is about providing a good outcome even for the half of the people who fall below the average result. If you’re suggesting replacing the present system with a privatized one, you can’t just evaluate them like a broker, focusing on average rates of return. You have to evaluate them like a member of a society, weighing social costs and social benefits and explaining how you propose to solve the problems resulting from the fact that while some people in a privatized system will do as well or better than average, many others will do worse.
[Note added in preview: most of this speaks to drachillix’s post too. Addressing specific new points: SSI administrative overhead is less than 1% of account value, while mutual fund administrative fees average 1.5%. “Progressivity” means that SSI benefits replace a larger share of income for lower-earning workers than for higher-earning workers, which the proposed private accounts would not do. Again, looking at it like a broker you might not care, but looking at it like a member of society, what are we going to do about those elderly people who made unwise investments when they were 60, or never earned enough to put more than a pittance into private investment? Do people who’ve worked hard all their lives really “deserve” to be miserably poor in their old age for those reasons?]
[Note added in second preview: what pantom said. :)]
I am not familiar with the bush plan so I really can’t comment on his approach as a whole
Robbing Peter to pay Paul?
Why would you want to convert to an annuity? Roll your investments into lower risk mutual funds and have them pay you the dividends and or capital gains on a monthly or quarterly basis. Minimal if any charges there.
True but…
Proper Prior Planning Prevents Piss Poor Performance
True on the average but my cite did point out it can be done more efficently than SSI’s 1% I had some investments with the vanguard group while saving up for my house, they were a dream to work with.
Thank you for the definition. I thought something like this would be obvious. A wealthier individual would invariably have personal retirement investments that would contribute more heavily to his income than SSI. A friend of mines dad was making so much on investments before he retired he hardly noticed the loss of income. Granted he make 60-70K a year and stashed alot of it (15-20K a year for 30+ years adds up) Unfortunately for him right now he had substantial holdings in Pacific Gas & Electric.
(insert forementioned harp seal style clubbing here)
He’s not going to lose his shirt but he will feel it.
I am operating under the assumption that you would be donating into managed accounts like most 401K’s you have all the help/advice you need from their people and if you want to ignore the pros, do so at your own peril.
drachillix replied to me: *“Where is the money to come from, though, for simultaneously paying guaranteed benefits to current retirees (for which the present SS system relies on current payroll taxes)and also letting workers start paying part of their payroll taxes into a private account?”
Robbing Peter to pay Paul? *
'Fraid I don’t understand. Is this a serious suggestion for some particular tax or other mechanism to cover the extra expenses during the years of transition to a privatized system? And if so, could you be more specific about what exactly it is that you’re recommending? On the other hand, if this is just a sarcastic dig at the unfairness of the extra expenses incurred at transition, could you suggest a way to get around the problem?
*“In addition, isn’t conversion of investment accounts into annuities kind of expensive?”
Why would you want to convert to an annuity? Roll your investments into lower risk mutual funds and have them pay you the dividends and or capital gains on a monthly or quarterly basis. Minimal if any charges there. *
Ask panzerman, he was the one who said “We are currently in a position to guarantee current benefit levels as a minimum floor, through the purchase of annuities.” I was simply asking him where we’d get the money for the extra administrative costs that would require.
I note, however, that annuities do have the advantage of continuing to pay benefits for all of the beneficiary’s lifetime (as Social Security currently does), unlike returns from typical investments. As I said:
“Moreover, privatization has the effect of time-limiting part of one’s benefits.”
You replied: *True but… Proper Prior Planning Prevents Piss Poor Performance *
I fail to see how a slogan solves the problem. Yes, good planning can (often) help increase and prolong one’s returns. But most retirees won’t be using only the profits from their private investments, they’ll also be drawing down capital. Many of them (especially those with more modest savings) will live long enough to run out of capital. How are we to deal with that problem in a privatized system, without resorting to those expensive annuities?
*“Addressing specific new points: SSI administrative overhead is less than 1% of account value, while mutual fund administrative fees average 1.5%.”
True on the average but my cite did point out it can be done more efficently than SSI’s 1% *
(By the way, all I know is that SSI’s overhead is less than 1% of account value, I don’t know that it is in fact greater than the Vanguard Group fee rate you cite.) But since most existing mutual funds cost more, how are we to get the rates down for privatized retirement account investments? Do we mandate that all private-retirement-account mutual funds must operate on a similar “at cost”, member-fund-owned basis?
*"“Progressivity” means that SSI benefits replace a larger share of income for lower-earning workers than for higher-earning workers, which the proposed private accounts would not do."
Thank you for the definition. I thought something like this would be obvious. A wealthier individual would invariably have personal retirement investments that would contribute more heavily to his income than SSI.*
I guess it wasn’t obvious enough, because I don’t understand your response. Are you saying that you don’t think lack of progressivity is a problem? If so, how would you deal with the problems of increased poverty for the many lower-earning workers whose benefits would be less progressive? If not, what are you saying, exactly?
A friend of mines dad was making so much on investments before he retired he hardly noticed the loss of income. Granted he make 60-70K a year and stashed alot of it (15-20K a year for 30+ years adds up)
Swell for him, but you do realize that the majority of retirees are not going to be saving 15–20K a year, right?
Unfortunately for him right now he had substantial holdings in Pacific Gas & Electric.
(insert forementioned harp seal style clubbing here)
He’s not going to lose his shirt but he will feel it.
Sorry to hear it. But let’s see, we have here an extremely affluent, foresighted investor who, presumably through no fault of his own, lost so much of his retirement portfolio in an unexpected stock plunge that even someone as well off as he “will feel it.” How, pray, is this supposed to be a recommendation for transferring trillions of dollars of retirement benefits (of mostly much poorer people) into the stock market? Yours is exactly the sort of cautionary tale that makes people realize the potential dangers of privatization.
I am operating under the assumption that you would be donating into managed accounts like most 401K’s you have all the help/advice you need from their people and if you want to ignore the pros, do so at your own peril.
Is that to be policy, then? Do we mandate that all payroll-tax private investments have to be managed accounts? Sounds like a lot of potentially expensive paperwork. And what happens when the pros screw up, btw, or simply get unlucky? There were a whole lot of pros managing accounts that lost a boatload of money in PG&E, for example.
On the matter of expenses:
Why would a private account neccessarily have to cost what the average mutual fund charges? Private Retirement Savings Accounts would certainly not be “the average mutual fund.”
When you quote 1.5% as the average expense ratio, you are including a lot of irrelevant examples–actively managed funds with deep research departments, funds with high turnover, and funds with very low asset levels but high fixed costs–none of which need apply to any Social Security private account.
By using indexing techniques, the accounts can be managed easily and profitably for 0.30% or less. Vanguard and several other fund houses already do it for 0.18% to 0.20%.
The liquidity is there, in the S&P 500 and the Wilshire 5000 indexes, according to Gus Sauter, chief of indexing at the Vanguard Group. There’s even more liquidity in the Lehman Total Bond Market index.
Throw in a few points extra to cover those with very small balances–those just starting out under the plan. Over time, though, you’ll have today’s middle-aged workers accumulating 200-300 thousand dollars in their accounts, and young workers just starting out retiring with 2 to 3 million. They’ll cover the expenses for new workers very nicely–especially as we go through the demographic contraction–for any fund company that’s willing to wait a few years.
I propose that workers be free to choose among the following investment options:
An S&P 500 index fund
A Wilshire 5000 Total Stock Market Fund
An index of U.S. Treasuries
A money market fund
A Lehman Total Bond Market Index Fund
A guaranteed return option
Workers should also be free to choose the existing Social Security setup as well.
On annuities:
As workers approach retirement, their accumulated savings should go to purchase annuities. An accumulated account of 300,000 is quite realistic for today’s middle aged workers 20 years or so from retirement, according to Marshall Carter and William Shipman of State Street Research.
At age 65, 300,000 will purchase an annuity that will pay about $2,500 per month for life. Which is over 3 times the typical monthly Social Security check we have now.
On the transition cost:
Yes, we will have some near- and intermediate-term costs to fund the transition from a pay-as-you go system to a fully funded system. These costs will be far less than the costs of ignoring the problem down the road, of course.
Here’s how to fund the transition:
Current workers have the option of remaining "in" social security. Their contributions go to support current retirees.
Employers continue to pony up 7% of payroll to the existing system.
The remainder should be funded with long-term bonds–say 30 years: across a generation or two. This would leave younger workers with the bulk of the bond payoff 20-30 years down the road. But it’s the younger workers who will benefit most by the conversion to a private account system.
I’m no actuary–perhaps someone here is–but I would be very surprised if a 20% or so capital gains tax on accumulated savings wouldn’t cover the whole kit and caboodle. So younger workers end up with 800,000-1.6 million rather than 1-2 million–based on 40 years of contributing 7% of payroll at a 8-10% annual return, dollar-cost averaged.
Throw in a 60% broad market decline right before someone retires–it STILL beats the hell out of the idiotic system we have now.
::pensions actuary grips head:: … so… many… misunderstandings…
What we seem to have here is someone (pman[sup]2[/sup]) who understands the investment of assets quite well but has very little understanding of the nature of the liabilities involved.
And this is one of the big problems of giving individuals total control of their pensions - very few people really understand the nature of the beast.
Recent UK study: over any given ten year period (going back a fair way) trustees of pension schemes outperformed members by a huge margin.
I’m afraid that a full answer to the question of the privatisation of social security would have been a 40 mark question in the exam I took a fortnight ago and I don’t have an hour free to compose such a reply, but I’ll note some key points:[list=1][li]Please note the aim of investment in this context is not “maximise returns”. It is “maximise returns subject to a maximum acceptable risk”. That risk must be specified in a measurable manner - no handwaving. For example you may wish your criteria to be “No more than a 2% probability of being more than 5% lower than 25% of pre-retirement earnings”.[/li]
[li]The absolute key point, as mentioned by Kimstu - you have to look at the purpose of social security. This is an insurance for the government against a population that for whatever reason cannot support itself. Pensions are part of this - the aim is to provide a minimum standard of living after retirement.[/li]
[li]This means that social security pension investment is all about security - you want that specified risk criteria to be very strict indeed. The best match for this form of liability are government bonds.[/li]
[li]Once a minimum income is secured, feel free to go wild with any excess you may have. But the government doesn’t want to have to pay to pick up the pieces if you cock up.[/li]
[li]One must be very careful before making wholesale changes to the investment patterns of pension funds. As it is, 40% of the UK stockmarket is owned by pension funds, with life companies taking another 30% with investment funds chiefly used as similarly long-term savings vehicles. I’m guessing that the US is similar. One doesn’t just mess around with this kind of capital. A release of social security funds onto the private market will (a) hit the domestic stockmarket is unforeseeable ways and (more critically) (b) massively increase the demand for company debt - an investment class not currently equipped to deal with such an influx. The price of company debt may well increase in a bubble fashion, encouraging companies to gear themselves unacceptably in the future and threatening the wider security of industry.[/li]
[li]The government still needs money to pay its other social security commitments. Social security is in most countries a PAYG (pay as you go) system - I believe that this is the case in the US too (the reasons for this are beyond the scope of this post). This means that there is no pot of money funding each benefit - current contributions pay current benefits. Passing on a notional “fund” back to a member involves double payment and someone is going to have to pay for that.[/li]
[li]I’ll also pick up on the annuity point - if you know of another way to defeat all longevity risk I’d be interested to hear it. Again it comes down to the “secure a minimum, then mess around” approach.[/li]
[li]The vast majority of people are clueless when it comes to investment. Dumping them with a wodge of cash and telling them that they are on their own, or even encouraging them to do so if it is beyond their skill, is not the most ethical course of action.[/list=1]I’ll stop myself there since I could go on and on. Let me reiterate though: the purpose of social security is not as a retirement savings vehicle.[/li]
pan
I, too, question the effects of such a large amount of money being dumped into the investment market directly rather than indirectly via normal spending channels (ie-old fogies get their check and spend it at the supermarket, which then uses it for…etc etc).
As well, wouldn’t having everyone retire wealthy create some sort of inflation??? Something is intuitively telling me that everyone can’t be rich at the same time.
Thanks for all the detailed information, everyone, some of which is actually relevant. As Kabbes points out, SS is SECURITY - a governemnt-guaranteed source of income, NOT intended to be a complete pension fund but only as something to be depended upon. “Acceptable risk” has to be close to zero in the short term as well as the statistically-extrapolated long term. That’s what a “lockbox” is for, for anyone unclear on the subject.
To get to another point directly: How should the government, which accordiing to many can’t get anything right, select WHICH stocks or securities are to have this massive amount of money dumped into them? Can anyone propose something other than essentially contracting it out to a few private investment houses, with their own motivations that aren’t necessarily based on risk aversion and clients’ capital accumulation? Can any of the unfettered-free-market ideologues out there explain how it would work, without handwaving?
Well, I have a company 401K plan that gives me a choice of various stock funds and a safer money market fund to invest in. Alas, I wanted safety, so I took the money market fund and missed out on the 15 year bull market. (but that’s my problem.) Maybe the Bush plan would look similar. I agree with Elvis that it would be a windfall for whichever financial institutions were selected to administer it.
The fact that the lockbox Gore proposed doesn’t exist is precisely the problem with it. Thanks for the supporting link.
Elvis – I may not have been clear. The problem was that *Gore’s[i/] lockbox proposal was imaginary. There never was a concept behind the words. It’s simply a word without meaning. He might just as well have proposed to protect social security with a dweezilbop. (Actually, it supposedly had a meaning of paying down the debt by a certain amount, which has nothing to do with locks or boxes.)
In fairness to AG, other ignorant politicians of both parties also used this term (lockbox, not dweezilbop).