Not according to Casey Research, who read the plan. Instead:
...the Bush plan specifies that upon retirement, workers would be returned only the amount that exceeded inflation-adjusted gains over 3 percent. The SSA hopefully projects a return of 4.6% above inflation; the Congressional Budget Office, less sanguine, thinks a 3.3% return is more realistic. Either way, the government gets to hang onto the first several percentage points of your profit; brokerage fees included. What does this mean in the real world? Assume that you invest $1,000 per annum for 40 years, starting today, and realize gains at 4%, midway between SSA and CBO estimates. At the end of that time, your “personal” account would grow to $99,800 in today’s dollars, but the government would then take back $78,700, a pretty hefty bite. But what if it only grew by an average annual 3%? Thanks to the government’s 3% fee, your net is zero. What they intend to do if there are some lean years and profits fall below that mark has not yet been decided, but it’s not inconceivable that you could wind up owing the government money.
A lot of the discussion of the “privatization” plan has focussed on anticipated rates of return, while the real issue is one of property rights. Do savers only have the right to plan for their own retirment if they can exceed some statistical margin? Also lost in the discussion of comparing returns on private investments to “returns” on US treasuries is that government bonds are not in the economic sense an “investment” they are simply claims on the goverment’s power to tax, which are at some level no different than the social security program, which is just another claim on the government’s power to tax.
While stocks and bonds are funded by actual savings (plus or minus credit expansion due to fractional reserve banking), treasuries are a loan to the government to fund current consumption. Another somewhat irrelevant aspect of the debate on this issue is that surrounding the ability of individuals to invest in sophisticated instruments such as stocks and bonds, that require a high level of expertise. Under the gold as money system, the easiest way to save for people lacking financial expertise was simply to accumulate cash, i.e. gold coins, which tended to increase in purchasing power every year by a few percent as economic growth outstripped gold production.
Reisman notes that it is the fiat money system that has forced people into riskier assets because cash is constantly depreiciating.
