Stop the Raid, Start the Accounts
The new Social Security reform plan from Senator Jim DeMint and Congressman Paul Ryan et al would swap Social Security surpluses for marketable Treasuries. These marketable Treasuries would then go into personal savings accounts for those Social Security recipients who choose them. The accounts would create ownership and much higher retirement investment returns than the current system will provide. Over the very long run Jeremy Siegel's work shows about a 5 percent annual return for Treasury bonds. Interestingly, since 1977 that return has climbed to nearly 9 percent yearly. Of course these are risk-free bonds backed by the full faith and credit of the U.S. government. It's a great way to start personal savings accounts. Under current law Social Security surpluses are exchanged for non-marketable Treasuries placed in the Social Security Administration account. The Supreme Court has ruled that we don't own them. However, by placing marketable Treasuries in a personal IRA we will own them and we will get a better yield for retirement. Why this is so objectionable to Democrats is hard to understand.
Full size imagePosted by Larry Kudlow on June 26, 2005 4:06 PM to Social Security Choice