Reply #8: Borrowing to cover transition costs is only one small part of the problem.

[snippy]

Everyone has always known that the amounts in the Social Security trust fund would someday have to be borrowed in the bond market in oreder to pay future benefits. Depending on the details of Bush's plan, borrowing the transition costs may just be bringing that borrowing forward in time. The details of Bush's plan will have to address several other questions that may matter more than the amount borrowed to cover transition costs.

Among those questions are:

Will benefits be reduced for people who choose not to participate in the private accounts?

How much are benefits going to be reduced for each age group participating in the private accounts?

How will survivor benefits be affected, especially for participants in the private account system who then die young?

Will the decision to participate in the private account system be irrevocable?

What investments will the government allow individuals to make in the private accounts?

What other decisions, such as asset allocation and rebalancing, will the government allow individuals to make and how often?

What will be the administrative costs of the private account system and who will pay such costs?

What limits, if any, will the government place on future increases in the administrative costs?

What remedies will the government allow to private account participants for misfeasance and malfeasance by the managers of the accounts?

What safety net will exist for participants in the private accounts who have catastrophic losses in their accounts after or near retirement age?

I am sure there are other questions as well, but I doubt that Bush will have answers to these questions that satisfy even his supporters.