The New York Times Editor is not happy with the fiscal soundness of the nation under the present crew of deficit hawks:

A False Start on Social Security

Published: December 3, 2004


Even before the debate has truly begun over the centerpiece of President Bush's second-term domestic agenda - creating private retirement accounts within Social Security - White House and Congressional budget leaders have been floating the idea that it won't require a major increase in the federal budget deficit. This is dangerously misguided. Unwilling to raise taxes, Congress and the administration will have to borrow well over $1 trillion to turn the president's wish into reality.

For a country that already needs to borrow $2 billion a day just to stay afloat, that gargantuan price tag for privatization is one reason it's a bad idea. It is far from the only reason, and arguably not even the main one. Yesterday, for instance, the president's top economist said privatization would very likely lead to major benefit cuts, which could be devastating for people who lost money in their private accounts. For now, however, the cost issue is moving to center stage in Washington. It is imperative to refute the suggestion that private accounts would somehow, magically, pay for themselves.

The issue is how to pay full benefits to people at or near retirement if Social Security money starts going into private accounts. Since current wage earners cover the benefits for current retirees, every dollar workers invest elsewhere has to be replaced. This is the so-called transition cost, estimated at $1 trillion to $5 trillion.