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Sunday, May 29, 2005
IMF: Private Accounts Raise Debt
There are a number of reasons why President Bush's plan to partially privatize Social Security is not good policy -- it exacerbates, rather than alleviates the problem; it drastically cuts benefits; it is a first step in destroying FDR's signature program. As the AP's Jeannine Aversa reports, the International Monetary Fund proposes yet another reason not to support the proposal.
The centerpiece of the Bush administration's Social Security overhaul — letting workers set up personal investment accounts — would "pose fiscal challenges," International Monetary Fund staff say.The IMF staff are not the only ones concerned about the massive increase in debt that would occur as a result of private accounts.
[...]
While these accounts "hold the potential for raising the return on Social Security contributions, they would also imply a significant increase in federal deficits and debt in coming decades," the IMF staff report said.
Federal Reserve Chairman Alan Greenspan, who has urged a go-slow approach in setting up the accounts, has expressed concern that the government's increased borrowing needs might boost a variety of interest rates.If the IMF says private accounts are in effect bad policy and Alan Greenspan in effect says they are bad policy, shouldn't the Republicans pay at least a little heed?
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