The Progress Report:

NEVER MIND THE GAP: In a "significant shift in his rationale for the accounts," President Bush has apparently dropped his claim that private accounts would help solve Social Security's fiscal problems   "a link he made during last year's presidential campaign." A Bush aide, briefing reporters on the condition of anonymity, admitted "the individual accounts would do nothing to solve the system's long-term financial problems." The aide's admission is backed up by the details of the plan revealed so far; the Washington Post reports the plan would not "close the projected $3.7 trillion gap between Social Security benefits promised over the next 75 years and taxes expected to be collected. That gap would have to be closed through benefit cuts that have yet to be detailed."

NOT A BETTER DEAL: Having dropped the rationale that private accounts will help finance Social Security, President Bush now says the accounts are desirable "because they would be 'a better deal'" for workers. But analysis of the plan so far does not prove the accounts would be a better deal for anyone not working on Wall Street. Workers who opt for the private accounts would recover forfeited benefits through their accounts only "if their investments realized a return equal to or greater than the 3 percent earned by Treasury bonds currently held by the Social Security system." But CBO factors out stock market risks to assume a 3.3 percent rate of return. With 0.3 percent subtracted for expected administrative costs on the account, "the full amount in a worker's account would be reduced dollar for dollar from his Social Security checks, for a net gain of zero."

Can I add something?

Say we decide it's okay to increase the debt and lower the benefits for our children. We have to figure out a way to reduce the fees so we can project a return from the investment that's greater than the reduction in Social Security benefits, right? So we pool the money into a couple of investment funds. You get to choose which fund or balance of funds in your account. Assuming the funds are well managed, it would insure the money only goes to sane investments. The fees would make stupid profit for someone, but they'd be less per citizen-investor. All reasonable, right?

Now comes proxy season, when shareholders vote on the direction of the company, can raise issues, challenge board directors and such.

Tell me...who is going to vote the shares held in the investor funds?

Talk about government power distorting the market...

On another, related, subject...since George W. Bush has explicitly said privatizing Social Security would help solve its problems, letting that issue drop because someone said something anonymously might not be the best play.