Privatization of Social Security? Bad idea!

Why? It will harm the SS system in two ways:
1.)It will immediately reduce the surplus (available through 2012) that exists today;
2.)This will cause the government's general tax fund to pay out more than it takes in much sooner, thus raising taxes, eventually. This will add to the already growing deficit of 500 Billion dollars and more, annually.

Even more important are other issues:
1.)Lack of investment knowledge by most people.
As an example, before Enron, 80% of the workers had 90% of their 401ks invested in their own company stock. Never a good idea. This shows lack of investment wisdom; 2.)Even if everyone understood the investment arena, the average working person will not take the time or have the level of interest, to manage their savings to maximize future income, asset growth, and maintain some security.

The government, probably through a contractual arrangement, will have a large brokerage firm manage these personal accounts. Since these firms are major contributors to political campaigns, jockeying for these lucrative investment accounts would present a tempting area for further scandals and mis-appropriation of important retirement funds.

Since no less an expert than Warren Buffet predicts only an average 7% return on stocks over the next 20 years, it seems that any privatization proposal will not greatly increase the return for SS funds over what they already earn in interest on the IOUs from the US Treasury. Particularly when you subtract the individual fees charged (1%-2% on average, based on average fees for 401k plans today) to manage these accounts from the predicted rate of return of 7%. Yes, Mr. Buffet could be wrong, but his expertise speaks in support this prediction.

The only true beneficiary of this privatization proposal will be the Brokerage Houses who manage the accounts. Conservative versus Liberal politics aside, the purpose of Social Security is to benefit the individual not investment firms.