It may be additional taxes already scheduled or projected in budget surpluses, but they are additional revenues. For perspective, moving to a complete funding of the transition to full individual accounts would require ten trillion dollars in recognition bonds or massive tax hikes. While some believe that so-called recognition bonds have very little impact on the economy, I believe this is a risky assumption. There are a number of substantive and practical issues raised by the many proposals to establish personal defined contribution accounts. Let me briefly mention several.
Numerous tradeoffs exist in achieving desired goals.
For example, the more choice afforded workers on their investments, the more likely that some will do relatively poorly, thereby increasing pressure to make up the difference later. Clearly, even minimal education knowledge of the principles of investing is not universally, or at least likely to be universely followed. At the very least, an array of broadly diversified, perhaps index, fund choices should be available. The record keeping, checking errors, accounting, trustee, legal and investing costs would be large relative to small periodic contributions from low earners or part time workers. I believe technology and financial innovations are driving these costs down, as the availability of no load mutual funds such as through Schwab's OneSource, demonstrates.