Is There Really A Crisis?

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One of the most crucial interest groups will be Wall Street. But where, precisely, is its interest? The general assumption has been that investment firms stand to gain a windfall from money that would flow into the new accounts. At the other end of the Street, the bond market could turn thumbs down on the grounds that trillions in new government borrowing would hurt the economy, raise interest rates and make the dollar suffer. But both assumptions may be overblown, financial experts say. Though University of Chicago economist Austan Goolsbee has estimated that the financial-services industry could reap $940 billion in fees over the next 75 years from private accounts--real money, even by Wall Street standards--some firms say the accounts look more like a headache than a bonanza. "Wall Street is at best ambivalent. The size of the accounts is nothing big," says Robert Pozen, chairman of MFS Investment Management. "How many Wall Street firms do you know that are running after people with $5,000 accounts?"

At the same time, the bond market may not be an obstacle. Snow heard caution but little naysaying when he made a pilgrimage to Wall Street last week. In a meeting on Tuesday with bond traders, he explained that the government might have to borrow $100 billion to $150 billion a year for 10 years to finance the new private accounts. Participants say the traders told Snow that the markets could easily absorb that much. As a bond executive said, "Mr. Secretary, that's a rounding error in our business."

The most ardent Republican supporters of private savings accounts say that Bush, having decided to take the plunge, should go all the way. He's expected to propose allowing workers to put one-third of the 6.2% payroll tax that is deducted from their paychecks into individual accounts. But advocates like Gingrich and antitax activist Grover Norquist want to know, Why not more? "It's going to take exactly the same amount of energy," Gingrich says. "You are better off trying to get the largest possible account." However big the plan, Bush recognizes that the politics inside his party are daunting. "Part of my effort," he told TIME last month, "is going to have to be to convince [Republicans] that taking it on is the right thing to do." But that might be easy for Bush to say. He doesn't have to run again. --With reporting by Perry Bacon Jr., Massimo Calabresi and Matthew Cooper/ Washington and Daren Fonda/ New York

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