This morning on ABC, Stephanopoulos again put the private accounts question to Sen. Kent “The Kernel” Conrad (D) of North Dakota, who responded thus: “I think there is a kernel of a good idea with individual accounts, because we do need to find a way to get a higher rate of return on funds invested in Social Security. But I cannot support a plan that is financed by massive new debt. You know, the president’s plan would require the borrowing of something like $4.5 trillion over the next 20 years. This is on top of already record budget deficits⦔
As our new nickname suggests, I think this must be the dozenth time Conrad has used this ‘kernel’ line about private accounts. Presumably he has chosen this word to show he’s still a homey to all his state’s grain growers. But who knows?
So by all means, let’s crack open the kernel already!
Conrad says there’s a kernel of good idea in private accounts because we need to find a way to get a better rate of return on funds invested in the Trust Fund. But there’s no logical connection between the two.
Whatever better rate of return can be had from investing Social Security funds in private securities can be had by investing them in the aggregate rather than in millions of private accounts. And the former method — if you believe in the existing program — should be far preferable since that spreads out the risk associated with such investments and allows Social Security to continue as a defined benefit program as it is right now. The other alternative is to replace it with a system of unsecured 401k-style private accounts.
So when will Conrad crack open the kernel and just get to the bottom of this? At it is now, it’s awfully difficult to keep Conrad out of the Faction when he’s saying pretty much the same thing as (former Senate Faction Dean) Sen. Carper (D) of Delaware.
