RE: Responses/Questions to Mr. Reischauer et. al.

[Michael Jones <powderfinger99@yahoo.com>]

<<<<
However, private accounts
are the "only" way to provide for 
individual freedom with private ownership,
to privide greater insulation to prevent
politicians from 'dipping' into SS funds.
>>>>

ridgeway,

I agree with nearly every point you made in your post. However,
it is misleading to state the the politicians 'dip' into 
SS funds. By law, any excess funds are "invested" in special
treasury bonds (the special part about them is that the government
can set any rate it wants, since it is essentially lending to
itself).

One could make a case that the loan from SS to the Treasury
should be used to pay down debt instead of more spending on
government programs. In practice, the politicians just spend
it.

This funding mechanism is the big lie behind the SS Trust Fund.
Excess FICA taxes are invested in treasury bonds which can only
be paid back through more taxation in the future. Few people
would call these bonds investments since there is no wealth
generating mechanism behind them.

The Trust Fund has actually made the long term SS funding problem
worse. 

However, there are many people in government and liberal think
tanks who believe that these bonds are real investments. They
would feel no remorse about raising taxes in the future to
pay back the principal + interest on these "investments",
or to increase the "return".

All I ask of the persons who reject real reform is to take a 
position on this aspect of how the contributions are invested.
If you want to continue to invest in government bonds, the
only future recourse is to raise taxes in the future to pay
the loans back with interest. How else can the liabilities
created by the system be paid back?

This is a perfectly acceptable position to take. What taxes
will you raise? Who will be impacted by them? It is far
better to know ahead of time what will be required to maintain
the current system sooner than later.


Michael