As I’ve blogged before, there is a significant political side benefit to privatizing social security that few people take into account when discussing it. Maya C. MacGuineas, writing in the monitor, explains it in more detail.

She writes:

In the past, Social Security’s surpluses have been saved in the program’s trust funds.

The funds are invested in government Treasuries - in effect the government is lending money to itself promising to repay itself later. While the promise to repay the money may be there, the resources have already been spent.

Assuming we are willing to make the tough choices to address the shortfall right away, the program’s surpluses will be larger and last longer.

Continuing to put money in the trust funds would be exactly the wrong thing to do - because the funds inevitably end up being used to underwrite another round of tax cuts, expanding the prescription drug program, or something else - as they have been in the past.

Sure, politicians could promise not to spend the money. But we have gone down that path before and have little to show for it other than a handful of Social Security promises with no feasible plan for how to pay for them.

The better option would be to save any Social Security surpluses in individual accounts so they could not be spent on other areas of government. No millionaires, no free lunches, but a better place to save money for Social Security(emphasis added).

Heritage Policy Weblog explains the importance of this side affect:

In other words, a personal account would be your own lockbox, protected by constitutional rights that are far more secure than any statute or promise. This is part of why, from a financial perspective, accounts must be part of any plan to bring Social Security to solvency. There just aren’t any good alternatives for saving surplus funds.

For more on the lockbox policy, read this and this.