If you want a link, here's a White House press release in which Cheney is quoted as describing the Administration's plan this way: "Each personal account would be under the individual worker's ownership and control. He or she would make regular investments in bonds or stocks throughout their working life . . . ."
http://www.whitehouse.gov/news/releases/2005/01/20050113-5.htmlPerhaps you want a link to a source of unsurpassed expertise on matters of prudent investing -- such as the Ohio Republican Party. Their website mentions what's also been suggested elsewhere, that the privatized accounts would be similar to the existing Thrift Savings Plan (TSP) for federal employees:
"Like TSP, personal retirement accounts could be invested in a safe government securities fund; an investment-grade corporate bond index fund; a small-cap stock index fund; a large-cap stock index fund; and an international stock index fund."
http://www.ohiogop.org/News/Read.aspx?ID=813I think the most common expectation is that this is how it would work. Employees wouldn't have unlimited discretion, or even very much discretion, about investment vehicles. I'm sure a lot of these 20- and 30-somethings who support the plan are confident they can spot the next Microsoft. Well, even if they can, they'll have to back their analysis with some other money. The most likely scenario is that the government would set up only a handful of funds, representing different mixes of stocks, corporate bonds, and public bonds, all fairly conservative.
Of course, we don't know how many people would choose to divert some of their money into the privatized accounts, or how much of that money would go into stocks, private bonds, or state and local public bonds. Every dollar of current Social Security tax receipts that's directed to one of those investment vehicles, though, is a dollar that's not available to pay benefits to current retirees. It's those diversions from the current pay-as-you-go setup that would force the Social Security Administration to begin redeeming the bonds it's holding earlier than it otherwise would.
This point may seem a little dry, but it's important. Bush is pointing to projections of a need to begin redeeming those bonds toward the end of the next decade. What's fascinating is that he then proposes a plan that makes that problem
worse. Obviously, the imbalance between current revenues and current expenses is just the pretext for his plan, not the problem his plan actually tries to solve.