Washington Post: the Markets Will Not Fix Social Security

The Washington Post had a good column the other day, revisiting the spectre of investing the federal Social Security funds in the stock market. Read on:

“The idea of the market as cure-all arose during the great bull market that ran from August 1982 through March 2000. With stocks (as measured by the Standard & Poor’s 500-stock index) returning an average of 20 percent a year in capital gains and dividends, middle-class people could fund their own retirements with minimal effort and even afford private college for their kids if they started saving early. Market gains would transform state, local and corporate pension funds from underfunded to overfunded, and capital gains — and stock option — related tax revenue would balance budgets on the federal, state and local levels. No pain, all gain.

The topper came four years ago: President George W. Bush could even propose privatizing Social Security by letting beneficiaries invest in stocks and have the idea taken seriously. Now the cycle has shifted. For many older baby boomers who once felt comfortable but have seen their 401(k)s and other accounts eviscerated the past two years, the magic words are no longer “stock market” — they’re “Social Security.” See full article here: