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 (such as 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.
