Myths and Misperceptions

Privatization is Part of the Solution

While "privatization" is being touted as part of the Administration's solution to the impending "crisis", it actually has little or no effect on the situation, whatsoever and actually makes the situation worse until all retirees have had the option to have converted to privatized accounts (that means those just entering the work force have died -- approximately 65 years.)

Simply, "privatization" would allow individuals to divert part of their social security accounts to personal accounts. This fundamental change means that some portion of the taxes being paid by these individuals would not be available to pay the benefits of current retirees, reducing the SS trust fund balances and requiring that additional money be borrowed if we continue to pay full benefits according to the current formulae to those who did not have the "privatization" option available during any part of their working career included in the computation of their benefits.

In fact, all benefits attributed to "privatization" are actually benefits attributable to the means of investment and to additional reductions in standard benefits attributed to the increased revenues available from private accounts (Benefits that could be obtained by changing the investment strategies of the Trust Fund, itself.)

Further, there is no recovery of the costs of transitioning to privatized accounts. But that's a myth of its own. (See myth that Transition Costs. are an investment, not an expense.)