Comparing an individual account with the program is a different can of worms. The program is not just a retirement program. It provides insurance against disability and dying early (and leaving survivors with no breadwinner). It is redistributive and inflation-adjusted (the latter not generally available till recently). It economizes on administrative expense (potentially huge) and on conversion cost (the cost of converting a lump sum into an annuity, also very significant).
The carve-out doesn't change the worker's after tax income while working, but it raises the question of how the Trust Fund is made whole. Strictly speaking, that speaks to the actual 'return' from private accounts as well.
The idea that Dubya has proposed a 'plan' is a total misnomer. He has done the equivalent of saying he's giving away money w/o specifying how it would be financed, all under the gloss of individual accounts and public dreams of stock market riches.
The best way to deal with the Social Security "crisis" right now is to do absolutely nothing, IMO, since there is no crisis. If it was 2013 and the Trust Fund needed cash, I would use general revenue. If there was not enough, I would raise payroll taxes a bit. If that was not enough I would use income taxes too.
mbs
So, Dubya's saying that someone could earn more with an inflation-adjusted t-bill than with social security ignores that the person investing can't use that money to pay, for ex., for his father's nursing home or his kids' school right now. (And both of them are due.) ie. It ignores the "social" in social security.
What are the non-zero sum way to transfer or constrain purchasing power? Christian