For true Social Security, look to Main Street, not Wall Street.

• Author: Rundles, Jeff
• Position: Rundles Wrap-up

FOR WHAT SEEMS TO ME LIKE THE UMPTEENTH TIME, people in Washington are talking about Social Security reform. Ronald Reagan promised it. The first George Bush promised it. Bill Clinton promised it. And now George II is promising it, too.

The difference this time, of course, is that, for the first time in the long debate over such reform, we have a second-term president with what he thinks is a mandate for change, coupled with the two houses of Congress controlled by the same party as the occupant in the White House.

It is a prescription for disaster, particularly because the rhetoric hides the real agenda.

There is a better way.

First of all, while Social Security isn't a perfect system and does need some tweaking, it is not on the verge of collapse as some would have us believe. Indeed, Medicare and Medicaid are pretty much on life support and need immediate attention from Washington, but since they deal primarily with poor people there is little, if any, political capital involved. Social Security, on the other hand, is big-time politics, and since the planets appear to have aligned for the Republicans, they think they can finally get something done.

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Trouble is, what they want to do is the wrong thing. Yes, the current return on the Social Security investments we all make is about 1.5 percent, and yes, the long-term return from the stock market is about 10 percent. The White House is sending out all kinds of pundits to point out that individuals would be better off if they were allowed to handle their own Social Security investments in private, Wall Street based accounts. Of course, if you happened to have retired in the fall of 2001, or in 1985 or 1987 or in any number of other specific years, your return on your investment would have been horrible and you would have not benefited from the supposed long-term benefits of the stock market. It's easy to take the long view if you are not now drawing on your retirement account.

The truth is that private, Wall Street-based retirement accounts benefit Wall Street. The billions of dollars that we all pay into the Social Security system will go to investment banks and mutual funds to manage, and they will make fortunes--win or lose--while we may or may not reach our retirement goals. And, as an added negative, there is nothing built into the private-account system that mandates investments in America.

Nothing in the proposals addresses American education American jobs...