Moonbeam and Chess...
i can understand your concerns with folks potentially having less than stellar investment returns, should we allow a privatization plan to go into effect. But will you allow me to outline some of the case for doing exactly so, despite that possibility?
1. First of all, can you agree that Social Security is, in financial terms, an annuity plan? Pay in now, and once you reach a certain age, for as long as you live, we will write you a check. There's only one problem with that - a good payout on Social Security is predicated on that you live long enough to collect it.
Let's say you work hard your entire life - working, paying the bills, and trying to put kids through school. Now you get ready to retire, and on your 65th birthday, retire, and get ready to recieve your SS checks. Then you die the very next day. Well, under the current system, you and your heirs are pretty much screwed. You're dead, and your estate gets diddly squat from Social Security (i think a surviving spouse might get some, someone correct me if i'm wrong). How fair is that?
2. As a corrollary to point #1, under a privatization plan, the money set aside for me would be mine. It would be mine to keep, and to pass along to my estate, should i die and not be able to collect SS. It wouldn't (entirely) relieve me of my obligation to contribute to the Social Security system, so it's not as if anyone would be getting a free ride.
3. And even more reason to like #2. Since i would own the money in my plan, i wouldn't need to depend on the government for the amount of my benefit. As it stands right now, there is (and never could be, since it is an entitlement program, a guarantee from Uncle Sam that i will recieve a certain rate from SS, only that i will get paid. What if, due to crisis or Crash, SS payments had to be reduced sharply in order for the government not to go belly up?
4. So what if i'm a lousy investor. Since the money is MINE, not a government entitlement, i don't care if i lose money. If it's my money, and i lose 99% of it, that's still more REAL money than Uncle Sam's promised money. I think i heard an old expression once about "one in the hand is worth..."
5. No privatization plan would or ever could be perfect and offer a guarantee that you would not or could not lose money, theoretically at least (since as others have pointed out, privatized funds could be "invested" in an FDIC insured product, such as a cd, which has no risk at all of capital loss). But the only "guarantee" you offer is that politicians will never dare cut off or reduce SS benefits. Which of those two risks (market risk of loss, vs. the risk of trusting implicitly a politician to honor his word) do you think is the more foolish of the two to accept.
ummmmm... personally, i would choose for myself a privatization plan. But since you prefer the comfort (and false comfort, in my opinion) of Social Security, we would allow you that option. Where is the problem in this picture, the doom and gloom scenario that Privization would be the end of the world? To my point of view, EVERYONE ends up happy if a privitization choice is offered.
By opposing any form or fashion of privatization, the Dems seem to show a lack of willingness to allow a Dem-built social program to be in any way changed (and i would say improved) from its present form. And who knows, this might work for them. I don't like it, but that's why we hold elections. But i think privatization is an idea which is going to gain momentum no matter what happens in the short term, and despite the reservations of any particular party or politician, and/or their best efforts to maintain a status quo.