The Grow Act stipulates that the each individual's payroll taxes will be used to purchase marketable U.S. Securities (read: treasury bonds). Currently, payroll taxes are paid, a certain portion thereof goes back out to pay for Social Security obligations unencumbered in the present, the surplus is "borrowed" by the Treasury who in turn issues a security in its place (a T-Bill?), and the surplus revenues are spent covering holes in the budget and concealing the true size of the deficit. In fact, we only have a surplus on a cash basis but not when properly accounted for in an accrual. I guess my basic question, is what would change if an account were created, and a T-Bill was issued to said individual account, a lockbox if you will, as opposed to the Social Security Administration?
- Is it that the T-Bill is a marketable security whereas that debt issued by the Treasury to the Social Security Administration is not(I don't know if it is or isn't, this post is because I am too lazy to research this myself)? Though, this isn't necessarily all that different in so far as it puts payroll tax money in the Treasury, it just may mean that the publicly held debt is more secure in so far as the Government won't default (God forbid) on T-bills whereas it can write away the debt it issues itself (i.e. from the Treasury to the Social Security Administration) without having near the consequence on global capital markets.
- Would this cause the federal government to actually recognize its full deficit, i.e. the general fund deficit plus social security surplus revenues no long available to congressional plunder? If this were the case I believe this in of itself would be a worthy goal as the reported deficit would higher (and accurate) and we would be forced to actually question things like are the Bush tax cuts affordable, what are our spending priorities (Iraq War? Prescription Drug Plan?)?
- Or is it that this bill merely has the "virtue" of containing the word "ownership" in it?
Just some thoughts, obviously, as stated in the title, it is my view that social security reform is a dead horse, and this is not necessarily all bad. But any input on these issues would be much appreciated.