Letter: Other solutions readily available

Friday, Feb. 11, 2005 | 9:19 a.m.

President Bush wants to make a significant portion of Social Security premiums available to be invested in the American economy. Mutual funds and bank certificates of deposit would be the principal allowable investments. That certainly sounds practical, especially in view of the present handling of each year's Social Security surplus.

This privatization proposal, however, is not necessary and probably has pitfalls.

The simple and practical solution is to instruct the Social Security administration to stop sending each year's surplus to the Treasury Department (to help pay for the current year's budget). Instead, the administration should be instructed to invest the surpluses in those types of investments in which the president wants individuals to invest. When Social Security premiums no longer exceed the benefits being paid out, estimated to be 2018 or later, the necessary amount of investments would be redeemed for cash.

Ah, but what about the Treasury Department's need of cash over and above income tax dollars to fund Congress' annual budgets? Simple. Just issue Treasury bonds, not to the Social Security Administration, but to banks willing to loan the money. Of course, treasury bonds (whether held by banks or the Social Security Administration, can be redeemed only with monies raised through the federal income tax!

Maybe Congress and the president should look for ways to reduce their spending.

LARRY JOHNSON