Such arguments ignore the enormous unfunded liabilities of the current Social Security system. Any valid discussion of the costs of moving to a market‐based Social Security system must compare those costs with the costs of maintaining the current system, including the costs of meeting those unfunded liabilities.
The mechanisms for paying those costs remain the same whether one attempts to prop up the existing system or shift to a new, market‐based system — debt, additional revenue, reductions in spending within the program, or reductions in spending elsewhere in the government. Regardless of the mechanism used to pay those costs, moving to a market‐based system will always be less costly than attempting to preserve the current system.
Therefore, redesigning Social Security as a market‐based system of personally owned retirement accounts does not actually entail any new costs. Indeed, moving to a market‐based system can ultimately result in substantial savings.
