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Gross Criticizes Social Security Plan
By Bill Gross, CNN Money
February 4, 2005
J.D. Crowe
Manager of biggest bond fund contends individual accounts not the answer, wants deficit reduction.
Gross, managing director at Pimco, called the argument about the solvency of Social Security "silly" and said it was an example of the president not focusing on more important issues, such as the budget deficit.
The president's argument for individual Social Security accounts is meant "to promote an agenda that has little to do with seniors and more to do with Bush, his ownership society, and ultimately his domestic legacy alongside the likes of Ronald Reagan and FDR," Gross wrote in comments posted on Pimco's Web site.
"Without a blockbuster of a program in his second term it is unlikely that Bush can go very far in the history books on the back of a paltry 3 or 4 percentage point tax cut for the rich," Gross wrote.
"Presto!" he continued. "We now have partial privatization of Social Security heading the agenda upon which the president intends to spend his well-advertised political capital."
But while the president says that will help fix Social Security, "the problem has more to do with demographics than the lack of ownership," Gross wrote.
Gross argued that it will take more than individual Social Security accounts to correct a projected shortfall and suggested the government should focus on cutting the budget deficit instead.
"Production can only come from employed workers and so the basic solution is to produce more workers, either through immigration or postponed retirement for the existing work force," he wrote.
"By reducing budget deficits now, and especially that portion of the deficit owed to foreign governments, we would be able to keep more of our domestic production within our borders and therefore available to senior citizens."
President Bush on Thursday kicked off a five-state tour to push his plan to overhaul Social Security, an issue highlighted in his State of the Union address.
While the president offered new details of how individual accounts would work in his address, he did not address many outstanding issues.
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