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Social Security Reform Thursday: Week Twenty-Two.

Thursdays are good days for reform, because they fall between Wednesdays and Fridays.

That's why WILLisms.com offers a chart or graph, every Thursday, pertinent to Social Security reform. The graphics are mostly self-explanatory, but we include commentary on some of them where and when necessary.

This week's topic:

Millions of Lockboxes.

Last week, Senator DeMint, along with Senators Santorum, Graham, Crapo, Coburn, Sununu, Isakson, Enzi, Cornyn, Lott, Brownback, and Craig introduced the Stop the Raid on Social Security Act of 2005(.pdf).

The bill would take the surplus Social Security is projected to run each year until 2017, and sequester the funds away from the general fund of the United States Treasury, preventing Congress from spending them and running up an even more enormous "I-O-Me" tab than it already has. The funds would go toward millions of Social Security personal account lockboxes owned by individual Americans.

To eliminate the "risky scheme" critique, the personal accounts in the DeMint proposal would be comprised of United States Treasury bonds rather than stocks.

These accounts are not nearly as sexy as the personal accounts envisioned by President Bush and most Americans, but Treasury bonds aren't such a bad deal, either:

Over the very long run Jeremy Siegel’s work shows about a 5 percent annual return for Treasury bonds. Interestingly, since 1977 that return has climbed to nearly 9 percent yearly. Of course these are risk-free bonds backed by the full faith and credit of the U.S. government.

More importantly, these lockbox accounts will provide an opening for additional progress on Social Security reform. Once Americans experience the benefits of personal accounts, they will demand more. How could they not?

As Maestro Alan Greenspan put it, Congress needs to:

"...make the phantom 'lockboxes' around the trust fund real."

Making the trust fund real would have many benefits:

1. Unmasking the true size of the federal budget deficit, rather than obfuscating it through the diversion of Social Security funds, would force Congress to focus on fiscal discipline.

2. The assets, rather than vanishing into the federal bureaucracy, would earn compound interest. The accounts would grow at a far better pace than the fake trust fund (click image for .pdf):

Growing real assets. Protecting the surplus. Stopping the raid. Tackling out-of-control entitlement spending, which threatens to harm America's economy over the long-run. Advancing the ball on Social Security reform.

It's a win, win, win, win, win, situation.

And the House of Representatives is pledging a vote on Social Security. While reform is unlikely to overcome Senate filibuster, it is imperative, politically, for the Republicans to fight-- and fight hard-- to end the raid on the Social Security surplus.

Previous Reform Thursday graphics can be seen here:

-Week One (Costs Exceed Revenues).
-Week Two (Social Security Can't Pay Promised Benefits).
-Week Three (Americans Getting Older).
-Week Three, bonus (The Templeton Curve).
-Week Four (Fewer Workers, More Retirees).
-Week Five (History of Payroll Tax Base Increases).
-Week Six (Seniors Living Longer).
-Week Six, bonus (Less Workers, More Beneficiaries).
-Week Seven (History of Payroll Tax Increases).
-Week Seven, bonus (Personal Accounts Do Achieve Solvency).
-Week Eight (Forty Year Trend Of Increasing Mandatory Spending).
-Week Nine (Diminishing Benefits Sans Reform).
-Week Ten (Elderly Dependence On Social Security).
-Week Eleven (Entitlement Spending Eating The Budget).
-Week Twelve (Benefit Comparison, Bush's Plan versus No Plan).
-Week Thirteen (Younger Americans and Lifecycle Funds).
-Week Fourteen (The Thrift Savings Plan).
-Week Fifteen (Understanding Progressive Indexing).
-Week Sixteen (The Graying of America).
-Week Seventeen (Debunking Myths).
-Week Eighteen (Debunking Myths).
-Week Nineteen (Reform Needed Sooner Rather Than Later).
-Week Twenty (Global Success With Personal Accounts).
-Week Twenty-One (GROW Accounts: Stopping The Raid).

Tune into WILLisms.com each Thursday for more important graphical data supporting Social Security reform. We'll address more myths in future installments.

Posted by Will Franklin · 30 June 2005 01:22 PM

Comments

Posted by: Zsa Zsa at June 30, 2005 01:42 PM

Posted by: Cindy T. at July 3, 2005 12:47 PM

Posted by: Cindy T. at July 3, 2005 01:05 PM