Private-Account Concept Grew From Obscure Roots

[RedEarth]

Private-Account Concept Grew From Obscure Roots

By Jeffrey H. Birnbaum
Washington Post Staff Writer
Tuesday, February 22, 2005; Page A01


Twenty-five years ago, Peter J. Ferrara was a Harvard Law School student with what he called "the craziest idea in the world." In a paper he wrote before graduating, he suggested converting the government-run Social Security program into a web of private investments.

The paper caught the eye of Edward H. Crane, a former head of the Libertarian Party who had recently started the Cato Institute, which has a stated mission of encouraging "limited government." To him, Ferrara's idea wasn't crazy at all, but a way to challenge Washington's largest and most revered social program.

With Crane's backing, the proposal by the 24-year-old Ferrara began an improbable journey from the fringes of public policy into the mainstream. Today, far from its origins in the political wilderness, the notion of creating Social Security personal accounts is at the top of President Bush's domestic agenda and stands to spark the year's biggest legislative battle.

None of this would have happened without the persistence of conservative operatives, the explosive growth of the stock market in the 1990s and the eventual adoption of the idea by big business.

The story is peopled with quirky characters such as Ferrara, a brilliant and notoriously unkempt wonk, and Crane, one of the prickliest critics of Washington's bureaucracy. It also has its irony: After years of struggle in obscurity, the free-marketers are now at war with themselves. Crane, Ferrara and the business interests that have become the effort's primary financial supporters are at each other's throats over how to structure and promote the accounts.

http://www.washingtonpost.com/ac2/wp-dyn/A42525-2005Feb21?language=printer

[Callboy]

1. Lock Box, Prvt Accounts Its all the same bs

[papau]

3. Lock box meant use the payroll surplus to reduce National Debt

With Bush 5.6 T of Debt heads to 8.5 T shortly

With Clinton it was headed toward $3T by 2010.

It is not the same BS

With Bush your kids wil pay and pay and then your grandkids will pay as social services get cut to the bone and then the bone gets tossed.

[papau]

2. Amazing how non actuaries learn of the benefits of pre-funding and

think they have discovered something new!

Perhaps they could ask an actuary why pre-funding is not part of the system (the GOP's cry in the 30's and early 40's of "Socialism by the back Door" might be a reason- see Bob Myers (Soc Sec Chief Actuary in the late 40's to the 70's) book "Social Security" - and the National Debt difference/tax collection difference between fully funded and pay as you go). Deferal provides for less strain on the Gov - and adding debt to the Nat'l Debt to fund accounts provides zero new savings and zero new economic growth.

Everybody wants to be an actuary without going through the 10 years of training that it usually requires.