Allan B. Hubbard, the director of the National Economic Council at the White House, has published an op-ed in the Wall Street Journal today that once again pretends there’s no “clawback” for money diverted into private accounts:

First, voluntary personal retirement accounts help younger workers build nest eggs for their retirement that they own and control and government cannot take away. By allowing workers to put up to four percentage points of their payroll taxes in a personal retirement account, the individual gets a real “trust fund” with his or her own name on it that is saved for retirement. With the current system, all Social Security surpluses are spent by Washington politicians on other government programs…

Third, voluntary personal retirement accounts give younger workers the opportunity to get a better rate of return on their Social Security dollars. If an average-wage worker making $35,000 a year were allowed to take 4% of his or her payroll taxes and set it aside in a personal retirement account, starting at age 21, then when he or she retired that nest egg would be worth nearly $250,000.

But this worker’s traditional benefit would be reduced by the value of the money diverted into the account plus 3% per year interest above inflation, making the net gain much smaller. It’s not free money!