In an editorial condemning an increase in the cap on income subject to the payroll tax, the Wall Street Journal continues to pass off the false comparison between currently legislated Social Security benefits and estimated benefits from private accounts. Consider this graphic, which runs alongside the editorial:
The problem is that there is no such free lunch. Moving to private accounts would incur trillions of dollars in transition costs because workers' contributions would be diverted from the Social Security trust fund into private accounts. That's why the Bush administration proposed a "clawback" that would reduce your traditional benefit by the number of dollars contributed to your private account plus 3% interest above inflation annually. Such a mechanism would vastly reduce the gains from private accounts.