President Obama's secret plan to privatize Social Security?

Vote 0 Votes

In 2004, George W. Bush ran for President on a domestic agenda that largely relied on establishing privatized Social Security accounts so individuals could make their own investment decisions on a portion of their Social Security nest-egg. Shortly after his election, the President ran into a disapproving Congress, and all talk of privatizing Social Security vanished.

Six years later, President Obama just gave Americans the opportunity to privatize a portion of their Social Security nest-egg by asking for and receiving a 2% Payroll tax cut (currently for only two years, but I somehow expect this will become permanent). Unfortunately, this opportunity is being sold to American's as a "stimulus" and no one is being encouraged to save the 2% tax break Americans will be receiving beginning next year.

So, even though the tax cut "compromise" announced by President Obama two weeks ago, and passed by Congress last night is the height of fiscal irresponsibility, there is a silver lining for the disciplined wage earner who decides to save, rather than spend, their tax cut. Consider the extra 2% in your paycheck as your opportunity to establish your own privatized Social Security account, and choose a conservative investment that is likely to grow slowly and steadily - mimicking the portion of your retirement savings that Social Security is supposed to represent. Because after-all, if Social Security was on course for bankruptcy in 2037 (ten years before I can start collecting my benefits), then reducing its funding by 16% while not decreasing benefits must be a great way to fix the system.

My investment advice: avoid US Treasuries.