We can argue at length about whether the high stock returns such schemes assume are realistic , but lets cut to the chase: in essence, such schemes involve having the government borrow heavily and put the money in the stock market. Thats because the government would, in effect, confiscate workersgains in their personal accounts by cutting those workers benefits.
Once you realize whatprivatization really means, it doesnt sound too responsible, does it? But the details make it considerably worse. First, financial markets would, correctly, treat the reality of huge deficits today as a much more important indicator of the governments fiscal health than the mere promise that government could save money by cutting benefits in the distant future. After all, a government bond is a legally binding promise to pay, while a benefits formula that supposedly cuts costs 40 years from now is nothing more than a suggestion to future Congresses. If a privatization plan passed in 2005 called for steep benefit cuts in 2045, what are the odds that those cuts would really happen? Second, a system of personal accounts would pay huge brokerage fees. Of course, from Wall Streets point of view thats a benefit, not a cost.
1.According to the author, privatizersare those_____.
[A] borrowing from banks to invest in the stock market [B] who invest in Treasury bonds
[C] advocating the government to borrow money from citizens [D] who earn large sums of money in personal accounts
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