Because I Really Don't Get Economics

[bandandy]

Okay, so President Bush wants to make the big thing of his second term Social Security reform. That's understandable, I mean there are less workers supporting every retired person now than there were seventy years ago. The problem is this: I still don't have a firm grasp as to what the real nuts and bolts of the reform are going to be, because

Comments

[adamargyle]

the basic idea i've gotten on this reform is he wants to add another section to the scoail security program... it seems as though it'll take part of your check each week/month/however long and invest it in stock or bonds or something of that nature, where you could potentially make money off it. it seemed a lot like a 401k to me, but i could be wrong

[bandandy]

Yeah, I guess the whole idea is to make the entire system independent of a large group of workers. That is, instead of the money that's being made by the current generation workers going directly to retirees, it will be saved and set aside for when that generation retires. That way, when we retire, it won't matter if the future generation of workers is too small/poor to sustain us. There will be a somewhat large transitional cost, seeing as the government will have to step in and pay for the benefits of people on the old system when young workers start putting their contributions into their own accounts. But the system should sustain itself from then on. The current version of Social Security actually wasn't supposed to last as long as it has anyways. FDR himself said that it would probably have to be reformed in 1965, so we're already seventy years late