My major problem with the big conservative push for private accounts is that it tends to dodge the issue.
The problem of Social Security is how to fund its obligations. Personal accoutns may provide a supplement to some retirees, but they won't in themselves solve the problem. If everyone getting Social Security were to put 20% of their taxes into an account and receive 20% less benefits in the future, it would reduce the size of the problem as deficist would only be 80% as big when they started coming (although surpluses would be 80% as big as well), but everything would be proportionally the same. We'd still have to solve where we'd get that extra 80%.
Actually, the problem would be proportionally worse, most likely, as those who choose personal accounts are probably going to be disproportionately those who would have contributed the most and gotten the least from the old system. In other words, the people most likely to choose private accounts are the ones who are net givers, not net takers.
The implication of the private account system, as I understand it, is that the private accounts are meant to make up for cuts in excess of the amount of money put into them. In other words, someone who diverts 20% of his payroll taxes will get (for example) a 50% cut, not a 20% cut.
All of that plus the fact that in the short term, it will all be loss for the Social Security system. If private accounts don't go into effect for people within 10 years of retirement, then for the first ten years the private accounts will drain money from the revenue side of the system, without reducing the benefits in a similar way. In short, spending will stay the same while revenue goes down. And even after that, the reduction in spending (by reducing benefits for those with private accounts) will be very modest for the first few years, as only the youngest Social Security recipients will be geting money from their accounts.
When Bush says that for people near to retirement, the system won't change, I have the same skepticism as people have when he announces that there won't be a draft because is plans don't include one. Sure, if we assume that the plan you lay out is realistic. But if your plan does not conform to the facts, then I don't trust that you will be able to stick to it. If revenues from Social Security are greatly reduced in the first years after the private accounts go into effect, then benefit cuts for those near retirement may be the only way to keep the plan going. What then?
Of course, there is probably a way that Bush can avoid cutting benefits and still get his accounts. Higher taxes. Just like there is a way that he can keep control of Iraq without a draft. Mass murder of Sunnis. In both cases, I am less than thrilled by the prospect.
I don't have a problem with private accounts per se. But I do have a problem with the fact that so many "conservatives" portray it a a free lunch, a way to save the Social Security system without causing anyone any pain.
That is all.