"This deal is getting worse all the time"

Bush is not exactly Lando Calrissian, and Social Security "privatization" will not be exactly private. People will not be able to do what they wish with the money in their "private accounts." They will be limited to a very few "safe" index funds and only be able to rebalance once or twice a year. They will also not be able to withdraw any of it until they retire and then only as annuity payments. So, what's "private" about this?

Not much. But it's still better than the current system. The net change here will be a couple of things:

1. The money is out of the politicians' hands. That people will have a legal right to their social security savings is a huge step. This will force spending restraint in the long term.
2. People can pass on their social security savings to their heirs. Social Security was originally founded as an insurance system, not a savings system. However, as contributions have been forced higher, the government has kept the remainder of Social Security payouts once people die. The new system finally admits what it is: a forced savings program.

It also looks as if taxes may be raised to fund the transition, in the form of higher caps on payroll taxes. There's still a lot of wheeling and dealing going on in Washington over this, so the final form is not set yet. But the fundamental change that Bush wants, that has to happen to save the system from collapsing, is to get the Social Security money out of the politicians' hands. This is the sticking point. It will be interesting to see what kinds of compromises are made to make this happen.

Of course, even though the present reform may not be perfect, nothing prevents better reforms from happening in the future. In fact, the passage of Bush's reforms may finally move Social Security out of "third rail" territory and open it up to further discussion in the future. There are politically strategic considerations here that the critics at Mises, for example, don't seem to appreciate.