The front page of the Washington Post claims that extending the tax cuts and creating private accounts for Social Security would cost $3 trillion over a decade. Fully $2 trillion of this estimate comes from the private accounts.
It is important to remember that the “cost” of private accounts is a matter of moving some of the Social Security system’s obligations forward in time. The system is supposed to help pay for the retirements of current retirees and of today’s workers. Funding private accounts means that some of the money for today’s workers has to be set aside today. That is a formidable challenge, but it’s not the same thing as creating a new spending program.
If private accounts are part of a deal in which workers accept a lower guaranteed benefit, the long-term costs of Social Security go down. And since those long-term costs are the chief good reason to be worried about deficits in the first place, the apparent price tag should not keep us from going forward with the accounts.