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About Social Security

Pension Benefit Guaranty Corporation

Notre Dame's Department of Economics

Clinton's proposal makes sense, Ghilarducci says, because it avoids raising payroll taxes or cutting benefits. Privatizing, the associate professor of economics says, "relies too much on stock and bond markets, makes the young pay for the two programs, worsens the Social Security deficit, boosts administrative costs from 1 percent to 20 to 30 percent and suddenly makes benefits unpredictable for more than 70 million workers."

The main beneficiary of privatization, she says, would be Wall Street, since investment firms would gain 100 million new accounts and earn billion of dollars in fees.

Clinton's proposal mentions investing some of the surplus earmarked for Social Security in the stock market, but Ghilarducci says side issue shouldn't concern anyone.

"The government already puts plenty of money in the stock market -- trillions of dollars in state, local and federal government employee pension plans, for example, as well as $20 billion from the Pension Benefit Guaranty Corporation -- and the rates of return are competitive. We also can get high rates by putting the surplus funds in higher yielding government bonds if the stock market idea bothers people."