Privatizing Social Security ... Yada Yada Yada

The idea of privatizing Social Security confuses just about everyone.
Privatizing Social Security ... Yada Yada Yada
Social Security accounts for approximately one-fourth of the entire federal budget of the United States. mikeledray/Shutterstock
Tom Margenau
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Well, once again, the idea of privatizing Social Security is in the news. It’s a topic that delights some people, angers others, and confuses just about everyone. I’ve discussed it many times in the past. But I guess it’s time to clarify things once again.

One form of “privatizing” Social Security has to do with how the fund’s assets are invested. Some claim that Social Security should be managed more like other public pension funds. Most of those funds have a diversified portfolio, with a variety of investments. But every nickel of Social Security assets is invested, by law, in U.S. Treasury notes, considered by everyone the safest place to stash your cash. What most folks who advocate putting Social Security funds into private markets can’t comprehend is the immense size of the Social Security trust funds. Compared to large public pension funds (like many teachers’ retirement funds or police and firefighter funds), Social Security is like Fort Knox, and these public funds are just big piggy banks. Those funds may have millions or even billions of dollars in assets. But Social Security has trillions. That’s a big difference, and you simply can’t compare them.

Tom Margenau
Tom Margenau
Author
Tom Margenau worked for 32 years in a variety of positions for the Social Security Administration before retiring in 2005. He has served as the director of SSA’s public information office, the chief editor of more than 100 SSA publications, a deputy press officer and spokesman, and a speechwriter for the commissioner of Social Security. For 12 years, he also wrote Social Security columns for local newspapers, and recently published the book “Social Security: Simple and Smart.” If you have a Social Security question, contact him at [email protected]