Tuesday, February 2, 2010

Everything goes down with the ship

In today's Wall Street Journal, one letter to the editor commenting on Rep. Paul Ryan's (R., Wis.) roadmap for the GOP, mentioned a common fallacy concerning the privatization of Social Security:
...His plan to privatize part of Social Security is old news, having been put forward by President George W. Bush. Thank goodness that road was not traveled, given the current deep recession and the sharp losses in personal retirement funds.
What the reader doesn't realize is that the government too has lost a ton of money. Yes, retirement funds have gone down due to our current economic recession. But what or who does he believe pays for social security? The Tooth Fairy? No, the same recession which has caused stock market declines has also caused declines in government revenue. And guess what that means? If you said, government doesn't have money to fulfill it's Social Security obligations, go to the head of the class. In effect, that "lock box" which supposedly contains your social security just got a whole lot smaller. Just like your 401k.


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