No Quick Fix for Social Security System

Mercer Bullard, an assistant professor of law at the University of Mississippi and president of mutual fund shareholders rights group Fund Democracy, says that the question of whether to privatize Social Security is a social issue about a social contract.

Because of his experience monitoring the recent mutual fund scandals, he fears that if private accounts are created, the government won't be up to the task of creating millions of new mutual fund accounts and overseeing the financial well-being of account holders.

"What types of funds will be offered?" he asks. "How much is the government going to run the plan? Is there going to be a floor below which fund amounts can't fall? I surely have little confidence for people who are not and probably should not be investors."

Bullard says that educated Americans will make good decisions, while the uneducated will be vulnerable. Privatization, he fears, will only widen the wealth gap between rich and poor.

One argument in favor of private accounts hasn't been discussed as much as the "ownership society" or "personal wealth." But it is mentioned briefly in the president's 2001 commission report -- the idea that if individual Americans can keep for themselves what would otherwise end up as part of the Social Security surplus, their money will become savings rather than part of government spending.

"That's one reason I favor private accounts," says Mitchell, the Wharton professor. "They would be, in effect, off the government books. It takes them off the politicians' table."