Social Security is headed for trouble and we can't afford to wait to fix it.

It's been known for a while that Social Security is headed for a ditch, but politicians have avoiding dealing with a problem that is sensitive to older voters. By reforming Social Security now, however, we can potentially avoid massive funding shortfalls and take care of our retirees without ever having to raise taxes or cut benefits.

Social Security does need fixing, but the crisis is exaggerated and there are less drastic cures.

There is a funding shortfall in Social Security's future, but not one so big that it can't be remedied with small changes; for example, increasing payroll taxes or cutting back on benefits (see alternatives). The "crisis" is also not so severe when compared to the much larger problem of Medicare, where a shortfall of $27 trillion is predicted over the next 75 years, a far greater number than the $3.5 trillion shortfall predicted for Social Security (WP and GAO).

Private accounts encourage savings and investment and cut down on the government's future obligations.

Private accounts are part of the ticket out of the Social Security crisis in two ways; they'll boost the economy by encouraging savings and investment and they'll decrease how much the government owes to future retirees. If private accounts are invested in the market, future retirees should have more to retire on and will require less support from the government (NYTimes). Bush believes also that when more Americans start their private retirement accounts, they'll be encouraged to save and invest even more money. Meanwhile the economy will be given a boost by all the money the private accounts add to investment.

Bush's team has made it clear that private accounts will not fill the expected funding shortfall; which they will likely address by cutting back on future benefits. (WP)

Although critics say that the economy will be hurt by the added debt from transitioning to private accounts, those critics are missing two critical points. First, rather than destabilizing the economy, Social Security reform will shore up confidence in the economy because creditors will see us taking on long term problems (NYTimes) (in other words, the debt won't look like debt - it will look more like a wise investment in our future). Also, whatever government debt that is added will be balanced out by the increased investment from private accounts (WP).

Private accounts don't solve the problem and may even make it worse.

Critics have a number of issues with the economics of Bush's plan. Some, including the head of the Government Accountability Office, say the math just doesn't add up, that private accounts won't take care of the funding shortfall which can only be remedied by raising taxes or lowering benefits (WP).

They also say that private accounts, by pushing up the short term debt, could even make matters worse; a soaring debt can put a damper on growth by raising interest rates (NYTimes) (see citizenJoe's National Debt issue guide for more on this debatable topic). Regardless of whether Bush calls the added debt an "investment" in the future, the market will see the borrowed money as simply that - more borrowed money. Alan Greenspan is among those who caution against excessive borrowing to create personal accounts. (WP)

Other critics doubt that private accounts will boost the economy or will encourage more savings and investment. They also say that the accounts may end up being less of a boon because, more so than Social Security, they'll require a lot of money to manage and oversee. (Krugman)

Better to have one bird in the hand...

With the future of Social Security up in the air, Americans are feeling insecure about their future. Private accounts differ from promises of Social Security payments because they are actually the property of the workers and not a future promise the government can take away. With private accounts, no matter what happens to future policy, workers will have the security of knowing they own their own retirement account.

that you can leave to your children...

An added plus to many is that you don't lose your hard earned money when you die; unlike Social Security checks, private accounts can be passed on to your children.

Trading security for insecurity.

Critics see private accounts as more akin to gambling than security. What they like about Social Security as it stands is that a worker knows that, if she puts in her dues for 40+ years, when she retires she will get a check from the government no matter how long she lives. Private accounts, on the other hand, can run out. They are a gamble because how much you retire on depends upon the luck of the market. (To be fair, when Bush's plan is unveiled it is likely to create safety nets for the unlucky elderly.)