Could the TSP be the model for fixing the so-called “crisis” in Social Security?
Probably not. Bush has mentioned the TSP numerous times in the context of creating private accounts. But the proposal he sketched out in the State of the Union address does not actually look much like the TSP. The only similarity is, like the TSP, the White House plan would give workers a handful of relatively conservative investment options. This is important because of investment risk. Many Democrats and groups such as AARP, a powerful lobby for older Americans, have voiced opposition to a private-accounts system. Switching from a defined benefits program to an investment vehicle makes individuals vulnerable to risk, they say. In the current Social Security retirement system, seniors are entitled to an amount specified by law. In the TSP, federal workers may receive more money than they would have received through defined benefits, but they also could lose out. “Federal employees invest under certain guidelines, and I don’t hear them screaming it’s risky,” Bush said during a January
