Pimco's Gross Says Bush Social Security Plan May Fail
Feb. 4 (Bloomberg) -- Bill Gross, who manages the world's largest bond fund, said President George W. Bush's proposals for cutting a shortfall in the Social Security trust fund won't work.
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Gross, chief investment officer at Pacific Investment Management Co. in Newport beach, California, suggested instead that the U.S. cut its budget deficit.
``There's your problem, and neither privatization nor any goodly number of government bonds deposited in the Social Security trust fund can solve it,'' Gross wrote in a report published on the firm's Web site yesterday. ``The value of Treasury bonds and even stocks will be valued down in price as they are sold to pay for future goods and services.''
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``By reducing budget deficits now, and especially the portion of the deficit owed to foreign governments, we would be able to keep more of our domestic production within our borders, and therefore available to senior citizens,'' wrote Gross. ``Keeping the size of our future IOUs low and out of foreign hands would minimize inflation pressures and the transfer of goods and services overseas in future decades.''
The U.S. budget deficit swelled to a record $412 billion in the year ended Sept. 30, after shortfalls of $377 billion in 2003 and $157 billion in 2002. The Bush administration last week predicted a fiscal 2005 shortfall of $427 billion, almost $100 billion more than it predicted last year.
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http://quote.bloomberg.com/apps/news?pid=10000103&sid=aLefysUDtIbo&refer=news_indexI believe Bill Gross before the "con man in the WH". Gross is saying that bonds/market will be "under pressure" starting in 2018 since Soc Sec would need to "sell" bonds since they would be receiving less contributions from workers. Therefore the returns cannot be counted on.