Recent letters to the editor have criticized President Bush's proposed Social Security changes. These letters have, on the basis of pessimistic speculation and conclusions, rejected the proposed changes.
The writers have failed to consider the benefits of the proposed changes.
We could all benefit significantly by the stimulus resulting from the prudent investment of additional savings in growth of the American economy. Additional jobs would be created, chronic unemployment would decline and income would thus be distributed more evenly resulting in greater business activity.
Another type of benefit would be the new spending of retirees, resulting from the greater income produced by the compounding over time of the income from private accounts, which was reinvested in those accounts.
Some of the principal could be used at retirement to purchase an annuity to provide lifetime income and the balance could be reinvested in the private account to a payoff at death to the retiree's children. With social security, it is all gone when you die except for spousal benefits.
America has the resources to accomplish all of this. Dr. Jose Pinera, who designed Chile's successful system, got his Ph.D. in economics from Harvard. One vindication of the success of the Chilean system is that 95 percent of the people opted for private accounts rather than the government-guaranteed benefits.
America can succeed with the president's proposal because a similar plan was successful. Under that plan, members of Congress and government employees who contributed funds to the plan shared in that fund upon retirement.
A major benefit to date is that over a 16-year period, the average income of the fund from its investments was 12 percent per year, notwithstanding the volatility of the securities markets in recent years.
Objections such as transition costs are manageable. Congress needs to enact lock-box legislation so that Congress cannot spend social security taxes on political pork projects.
Taxes thus saved and invested in American security markets could probably cover the transition costs.
Considering the performance of the American security markets over time and the fact that we have the world's largest gross national product, American can do what the president has proposed.
Jim Winter, Payson