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Private investment accounts as part of Social Security -- Not somewhere over the rainbow but deep in the heart of Texas.
Working and three Texas -- is something governor Rick Perry has been touting on the campaign trail.
But our next guest says personal retirement accounts will never happen on a national -- Why Merrill Matthews is with us from the institute for policy innovation Merrill good to see you.
Why wouldn't happen ever as a nation.
Well first off they don't take an act of congress and there's been some trouble with that George Bush tried to do it.
But secondly President Obama has borrowed so much money -- four trillion dollars over the last two and a half years.
In order to finance these accounts to shift from the current Social Security system to one where people have their own personal -- There's a huge financing costs fair and it may it could cost.
Billion dreams of dollars to borrow that money so it's going to make you -- I don't think it's impossible.
But it will make it difficult for the transition.
-- federal government at this point.
That -- poll.
So -- the government money doesn't not it needs it needs to have -- security day care because it says security is essentially invested in treasuries.
And they're not marketable securities but that's where a lot of the money is outline.
That's right yeah it it borrows the money I have.
Current workers pay into the account.
That money is borrowed by -- made it -- current retirees.
The rest of the money goes into new Social Security trust fund which has been barred by the federal government since Dan rather things that it gives those what they call specials those treasuries.
I so there's no real money in the -- out.
And so if you're going to take certain retirees and they were going to a certain current workers.
And never gonna start taking that money and putting in their own personal accounts like they do in the three counties in Galveston.
It would take that money away from current retirees and that -- greater deficit is gonna make it very difficult.
Course three counties in Texas are doing very well with their personal accounts and incidentally -- seven million.
Who worked for some form a government state government.
A local government cities.
Teachers and so forth.
Who are not in Social Security right now they could shift over to something like those three counties in Texas.
One thing now if you listen to president -- is long term as in his budget proposals to entice us -- security and then on the Rai with the GO pay.
President Bush frankly victory trying to push -- private accounts turned out to be such a disaster are.
Then I would argued that the GOP is not gonna be anxious.
To really go after that type of reform and -- wrong.
It's a very good point and the reason that turned out there are several reasons why didn't work when George Bush tried to do it.
But one thing is it's always susceptible.
To this notion that it's a risky schemes that people go into these private accounts.
They lose the money because the stock market's gone down as it has the last couple years but.
In the three counties in Texas they have a thirty year track record.
They've been doing this for thirty years they have made money every year they have never lost money even 200820092010.
The market goes down.
Those three guys counties the workers there in that special account they ended up making money in those years -- did the same.
Thank you so much great discussion Merrill -- be well.