One of my favorite stories of 2004 concerned Senate Majority Leader William Frist and his campaign fund. Realizing he had an excess of funds, he invested in the stock market. He lost about $450,000 between 2000 and 2004.

You would think that would have taught Republicans the bitter lesson that everyone who plays the stock market must learn eventually: The market goes down as well as up.

It hasn’t. President George W. Bush is spending most of his time these days flogging his plan to “privatize” Social Security. He wants to make it possible for people to invest part of their payroll tax in private accounts, including stocks, if they want to.

kaul-socialsecurity-401(K) 2013

401(K) 2013/Flickr

It’s a rotten idea.

The fact that stocks are inherently riskier than the Treasury bonds our payroll taxes are now invested in is far from the worst thing about it. (Over the long haul, stocks do tend to make more money than bonds, even though that would be of little comfort to those who retired just after the market had taken one of its periodic plunges.)

The worst thing is that this particular privatization scheme is a complete fraud, supported by lies, false assumptions, and misrepresentations. It would do nothing to solve the coming Social Security “crisis” and even less to secure the system for generations yet unborn.

Here are just a few of the obvious flaws in Bush’s plan, as presented in his State of the Union address:

Social Security, which at present is a model of government efficiency requiring only a fraction of a percent to administer, would become much more expensive to run. (People who know their way around the stock market don’t work for free.) Maybe the accounts could turn a big enough profit to make up the difference, maybe they couldn’t. (Maybe they’ll find weapons of mass destruction in Iraq, who knows?)

If a large percentage of wage earners start putting their money in retirement accounts, there won’t be enough left over to fund the benefits of current retirees, so that our already debt-ridden government will have to borrow to keep the Geezer Nation in their Winnebagos. Either that or raise taxes.

Bush’s proposal, even in its vague outline, is complex beyond human understanding (unless you count editorial writers).

Here, basically, is how it would work:

When fully phased in, this alternative to standard Social Security would allow wage earners to invest four percent of their wages (up to a $1,000 limit) in government-controlled retirement accounts, which they would “own.” Well, kind of. They wouldn’t be able to withdraw from the account until retirement.

Upon retirement, wage earners would be expected to pay back the money that they would have otherwise paid into the Social Security Trust Fund, plus 3 percent interest above inflation.

After having paid that, retirees would be required to buy a government annuity with the “extra” money in their accounts in the amount necessary to ensure an income equal to the poverty level. This annuity, by the way, is not inheritable.

If there were any money left over, the recipients would get to keep it and do whatever they wanted with it, even leaving it to the grandchildren.

In the meantime, benefits for both private-account-retirees and people who just pay into the Trust Fund will undoubtedly have to be reduced. Bush didn’t say by how much.

Now I ask you: Can you understand any of that?

One of the great advantages of our system now is its simplicity. You know how much you’re putting in and you have a pretty good idea of how much you’ll be able to take out when you retire. Bush’s plan, on the other hand, is like playing three-dimensional chess with a chimpanzee.

There are a number ways our Social System can be saved. Destroying it isn’t one of them.

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Donald Kaul

OtherWords columnist Donald Kaul lives in Ann Arbor, Michigan. This is the first in an occasional series of his earlier commentaries.

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