PRIVATE ACCOUNTS WOULD SUBSTANTIALLY INCREASE FEDERAL DEBT AND INTEREST PAYMENTS

All of the major proposals to replace a portion   of Social Security with private accounts would require large increases in   federal borrowing for many decades.  This increased borrowing is not necessary   to restore Social Security solvency.   Instead, the increased borrowing would   be needed to finance the creation of the private accounts, which by themselves   would not do anything to restore solvency, and under some circumstances would   worsen solvency.Some plans with private accounts, like the   President’s, would shrink the solvency gap by reducing Social Security   benefits (over and above the benefit reductions that are designed to   compensate for the loss of payroll taxes diverted to private accounts).  These   benefit reductions would partially offset the increased borrowing that would   result from the private accounts.  Even when these benefit reductions are   taken into account, however, all of the proposed plans that include private   accounts would substantially increase the federal debt and the interest   payments on the debt.

Read the rest of this report from the Center for Budget and Policy Priorities.

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