In this piece, I argue that the “transition cost” argument against privatizing Social Security is bogus. I also make my usual case against what I call the Stock Market Scenario. Finally, I conclude by saying that privatization is the ultimate lockbox.

The real benefit of Social Security privatization is never discussed by either side in the debate. That benefit would be that Congress could no longer arbitrarily raise benefits and thereby increase the obligations of future taxpayers. Today, Congress can pass a benefit increase, such as the recently-enacted prescription drug benefit for Medicare, without specifying how to pay for it. The incentive will always be to expand benefits to the point where the system is bound to collapse.

Thus, what the Left sees as the biggest drawback of privatization — the “transition” from pay-as-you-go to fully-funded — is what I see as its most attractive feature. Privatization is the ultimate “lockbox” for Social Security, in that it would keep Congress from expanding future benefits without setting aside money to pay for them.

For Discussion. What are the real issues at stake in Social Security privatization, as opposed to the issues that will be raised politically?