According to the Congressional Budget Office (CBO), lawmakers shouldn’t assume adopting some form of involvement in the markets would lead to a Social Security turnaround, Dow Jones reported.
“By itself, using government resources to buy stocks and bonds, without other spending and tax changes, would not automatically lead to an increase in the nation’s pool of investment resources – there is no free lunch,” the budget office wrote in its report.
Noting that much of the current debate about Social Security has centered on how to establish claims on future resources for the system, CBO analysts wrote, “The use of private versus public securities, the creation of personal accounts, the scheduling of future tax hikes, and the reliance on future borrowing by government – while different in both form and potential effects – are all means of financing that prescribe how resources would be drawn from the economy, not how to produce them.”
CBO said such Social Security options won’t predictably build the resources to meet future claims, and that some of the options “could be harmful.” Having the economy expand requires measures that, among other things, induce people to consume less so that more money is available for investment, the CBO said
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