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It becomes more and more likely that by the middle of this century, all those hard-earned dollars that today's twenty- and thirty-year-olds have paid into Social Security will simply not be there.
Privatizing social security ensures the post-baby boomers that their money will be there for them when they retire. It takes the control out of the government's hands, which has notoriously not been the best financial advisor in history, and places in the hands of the individuals who earned it. In addition, eventually, it will reduce the expenses of the Social Security Administration as more and more workers no longer have to rely on the system. In addition, it puts money into the U.S. economy, not sitting stagnant in the U.S. treasury. This is likely to lead to a glut in the stocks and bonds market, leading to lower prices across the board. it's "the great depreciation scenario," otherwise as "asset meltdown hypothesis" that could lead to the bottom following out of the privatized accounts, leaving younger workers no better than they are now (Weisman & White, 2005).
Disadvantages of President Bush's Plan:
Both Raspberry (2005) and Weisman and White (2005) see one major flaw in the President's plan. The future scenarios that lead to the utter ruin of the Social Security System also historically correlates with a poor return on private investments as well, which would endanger privatized Social Security accounts. Some believe that "strong stock market returns of the past 20 years were an anomaly driven by a confluence of low inflation and low interest rates that is not likely to repeat" (Weisman & White, 2005).
References
Ehrenfeld, T., Atkins, a., Ozols, J.B., Crowley, P., Grimes, L., Joseph, N., Raymond, J., Reno, J., Shenfeld, H., Shulman, K., Skipp, C., & Quinn, J.B. (14 Feb. 2005). How to land on your feet. Newsweek, 145(7). Retrieved February 22, 2005, from Academic Search Premier database.
Raspberry, W. (7 Feb. 2005). A test of faith on social security. The Washington Post. Retrieved February 22, 2005, from Proquest database.
Sloan, a., Berman, a., Macbride, E., Reno, J., & Riccitiello, R. (12 Apr. 2004). Why your tax cut doesn't add up. Newsweek, 143(15). Retrieved February 22, 2005, from Academic Search Premier database.
Weisman, J. & White, B. (9 Feb. 2005). Bush's social security plan assumes much from stocks. The Washington Post. Retrieved February 22, 2005, from Proquest database.
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