Social Security: Is Private Investment the Answer?
Borrow money: The government could finance Social Security through deficit spending, keeping the rest of the federal budget in balance but borrowing to pay retirement benefits. This approach has the problem of reducing national savings and investment, jeopardizing future economic growth. Let government invest in stock market.Payroll tax revenues are now invested in government bonds before being paid out as Social Security benefits. To get higher returns, the government could invest some of the money in stocks. Critics, including Fed chief Alan Greenspan, worry that the government would do a lousy job of picking stocks. One advantage would be that administration costs would be much lower than if individuals had to pay to set up their own accounts. All of the above: Politicians may cut and paste from these and other possible solutions to keep the system solvent.
