More NRO on Social Security

Bruce Bartlett at NRO:

The whole point of creating private accounts has always been as part of a trade-off. Workers would lose future Social Security benefits, which are what stabilize the system’s finances, and the income earned on the accounts would compensate them for this loss.

Not quite (see table 2).
More Bartlett:

In other words, reforming Social Security now is less risky than doing nothing, as Democrats favor. When they scare people with benefit cuts, Democrats are in effect promising something that cannot be delivered. As many workers have discovered in recent years, the bankruptcy of private businesses often leads to a loss of pension benefits.

Is he really bringing up bankruptcy in an article supposed to inspire people to invest in the stock market? And as far as "cannot be delivered," here's reason to believe it might. And Democrats are not "in favor of doing nothing," they just see no reason to run headlong into a solution when the actual flashpoint is so far in the distance.

What this means is that long before the trust fund is exhausted, income taxes will have to rise by an amount equal to the difference between current Social Security revenues and benefits. In other words, income taxes will have to go up by about 2.5 percent of GDP between now and the date the trust fund is exhausted in order to redeem the bonds it holds, which will be cashed-in to pay benefits over and above Social Security taxes.

Scared yet? That's Bartlett's point. Personal income taxes won't have to go up in order to cover the projected short fall. Raising the cap to over $90,000 is a good place to start. The average worker sees no real change in his taxes, those who can afford to do so pay a little more, and those seniors who need it won't have to fear a stock market crash before they have to purchase an annuity to base the rest of their life on.