Mostly rational politics, with occasional rants about how a few crazy Republicans are ruining the country.
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Thursday, February 03, 2005
The Social Security plan emerging from the Bush White House is really strange - basically people who opt into the privatized system would only earn the return on their investments over and above the guaranteed payment had they stayed in the current plan. As the article points out, it amounts to a loan from the government which you can invest, but then you have to pay back the principal plus the inflation rate at retirement.
It's a worse version of what Clinton and other Dems recommended, which I echoed here, which would involve the government investing in bulk to increase returns on the trust fund, rather than many individual accounts. The advantage of the direct investment plan is that it would reduce the downside - the government could smoothe results. Under Bush's proposal, the upside is limited to incremental return only, but the downside (if the market tanks) is still large.