Bullish on Social Security?

NEW YORK: President Clinton and the Republicans will probably take another year haggling over the details, but the chief executive nudged Social Security across a historic line last night: into the stock market. Is that such a good idea? Alan Greenspan says the macroeconomics aren't sound -- pulling the fund's money out of low-yield Treasure bills and pumping it into those magical stocks will probably come back to haunt us in other ways. But TIME Wall Street columnist Daniel Kadlec says if making more money for the fund is the top priority, equities are the way to go.

"The current law restricts Social Security investment to U.S. Treasury bills, which on a good day gets you a 5 percent yield," he says. Historically, stocks promise 10 to 12 percent -- and it gets better: All that government cash could make equities a self-fulfilling prophesy, ratcheting up demand for stocks and underpinning the markets with an investment stream that doesn't budge on the dips. Sound like a sure thing? Pessimists, says Kadlec, will want to keep in mind the old Wall Street adage: "By the time the government figures out that there's value to something, it's already been seen by everyone else," he says. "And that means the value is already gone." Kadlec has one suggestion before the haggling starts: give us more of the money up front. "Most individuals will get a better return than the government can," he says. "And people will feel better about Social Security if they have some control over the money." Just don't put it all in a hedge fund.