During the second term which problem did George W. Bush attempted to address by calling for the privatization of social security?

Answer 1

Younger workers feared they would not have sufficient income after they retired.

Answer 2

Privatizing was an idea for making the social security fund more like other pension funds. ( At present all the funds collected for social security are spent . The social security trust fund is only a paper record of what has been collected with interest that has been added to it. The money for pensions must come from current revenue. This plan works fine so long as the number of people paying in increases faster than the number of people receiving payments but as the population becomes stable there will come a time when more money is paid out than is coming in. ) The idea of privatization was to buy stocks and industrial bonds with the money collected for social security and use the profits to pay the pensions.

This is the way that most state and industrial pension funds operate. An added feature was to allow individuals to have some choice about where their share of the fund would be invested. The idea was scrapped because the federal government relies on the FICA tax for general revenue. It would require a large increase in the income tax if the FICA tax were invested instead of being spent.

Answer 3

The big problem with social security is that the money collected for the fund is "invested" solely in US government bonds which means it is spent as soon as it is collected. Bush proposed that the money actually be invested in corporate stocks and bonds in the way that state and private retirement funds are invested, so that it would generate income that would pay benefits.

Answer 4

Baby Boomers could not invest their personal savings in the Stock Market --NovaNet