The Privatization of Social Security

Paper Summary:

This paper explains that plans currently being discussed to privatize Social Security would allow individuals to redirect between two to four percentage points (out of 6.2) of their payroll tax into personal accounts. The author points out that one of the budget problems in this funding of any privatization plan is administration, the costs of which would rise dramatically in a partially privatized system. The paper concludes that there is no way to analyze the budgetary effect of a partial privatization plan for Social Security because the variables are legion and probably only partially apparent and the problem of predicting the effect of the voluntary retirement plans on the stock market, which in turn affect government income, is overwhelming.

From the Paper:

"The Bush plan to partially privatize Social Security calls for what appears at first glance to be a simple shift of funds. If an individual has ten dollars in his wallet and can give eight of it to his banker to keep for his old age and put two of it into some speculative deal-let's say his nephew's Gator Aid-powered car design-then the bank has lost his $2 and along with it, one might assume, the costs of administrating that $2. On the other hand, he also has the opportunity to make millions with that minor investment. Since most of the current proposals would diminish Social Security income by the amount an individual earned in the private portion beyond a poverty-line-linked minimum income, the Social Security administration would save enormously on the successful investors by not having to send any checks. For someone who invested in Mr. Buzzbrain's Political Campaign No-Fail Exit Poll Predictor, however, and lost his or her $2, the Social Security administration would kick in to raise that person's retirement income to a poverty-line-linked minimum income."

More papers on The Privatization of Social Security:

• Argumentative Essay # 50545 : "The Privatization of Social Security"
• Analytical Essay # 50365 : "The Privatization of Social Security"
• Research Paper # 29239 : "The Future of Social Security"

APA Citation:

MLA Citation: