The Bush plan to "privatize" Social Security depends on funding the transition costs by confiscating excess returns from new private accounts.
That's right. They intend to calculate what rate of return you need to achieve to maintain the basic level of guaranteed benefits and if your account outperforms that rate of return, they will simply take it.
Who says? The White House says!
Ron Suskind in Slate:
The Free-lunch Bunch
The Bush team's secret plan to "reform" Social Security.
During the 2000 campaign, candidate George W. Bush seemed particularly confident about his ability to pay for Social Security reform. Despite independent estimates that creating the kind of "voluntarily" private accounts he envisioned could cost more than $1 trillion, Bush consistently took the position that he could reform Social Security for free, without undermining promises to baby boomers anticipating retirement over the next several decades.
Why was Bush so sure of himself? According to documents unearthed yesterday from the trove of 19,000 files given to me by former Treasury Secretary Paul O'Neill, and a bit of additional probing, candidate Bush and later President Bush believed in the "Lindsey Plan." These documents show us what the president thought about Social Security reform at the only moment over the past three years--the fall of 2001--when he was fully engaged with this issue.
Larry Lindsey, Bush's tutor on economics during the campaign and later chairman of the White House's National Economic Council, devised a scheme based on creative accounting principles. Essentially, it proposed that the government would issue substantial new debt to sustain old-style benefits. This debt would be serviced and paid down by confiscating revenues from the higher returns from those opting for new-style personal accounts.
More...
[update]*Edited to add some links to suggested additional reading*
Links to articles from James Galbraith, Paul Krugman and the Tax Policy Center can be found in this post at Salon.
Links to the SSA including FAQ's on the trust funds and the trustees annual reports can be found in this post.
Links to the beginnings of rather long discussions of these issues in more than one Table Talk thread can be found here.
The biggest problem we face with Social Security is our "liberal media" repeating RNC spin points about a non-existent "crisis" and too many people who believe what they hear without bothering to check into it themselves.