"'It's a badly, badly flawed plan,' Robert Rubin, the former secretary of the treasury and current Citigroup director, told me. 'From a fiscal point of view it's horrendous. It adds to deficits and federal debt in very large numbers until 2060.' He calculates that the transition costs of Bush's plan for the first 10 years will be at least $2 trillion, and $4.5 trillion for the second 10 years. The exploding deficit would have an 'adverse effect on interest rates, an adverse effect on consumption and housing prices, reduce productivity and growth, and crowd out debt capital to the private sector. Markets could begin to lose confidence in fiscal policy. The soundness of social security will be worse'.

Rubin adds that the stock market is hardly a sure bet. 'You are not making social security more secure by subjecting people's retirement to equity risk. If you look at the Nikkei in Japan you get a sense of what can happen.'"

- posted by Anonymous @ Thursday, January 20, 2005