Gramlich notes, might be "the most sensible way" to get current retirees, "who already get a good money's worth return on their Social Security contributions," to help solve the sys- tem's problems. This approach would also have the Social Security trust fund gradually invest up to 40 percent of its assets in the stock mar- ket--instead of, as is now done, in Treasury bills--to take advantage of the historically higher returns. One danger: with more than $1 trillion-one-seventh of the gross domestic product (GDP)--involved, management of the money might become politicized,

Individualaccounts. "My personal favorite:' Gramlich writes, "tries to scale back benefits to eliminate today's long-term actuarial deficit." The normal retirement age would gradually rise, and benefits for high-wage workerswould be cut. Then comes the critical part: mandato- ry individual savingsaccounts funded by a 1.6 percent payroll tax. The accounts would be held by the Social Security system, but individ- uals would be free to choose whether to invest their funds in bond index funds, stock index funds, or some combination. This would reduce, if not eliminate, the danger of politi- cited investment decisions,

Personal security accounts. Instead of small-scaleindividual accounts, this scheme would create much larger individualized sav- ings accounts, called "Personal Security Ac- counts." Of the 12.4 percent payroll tax (paid half by employers, half by employees), five per cent would be diverted to those accounts, which could be administered by private regis- tered investment companies. Government benefits would be reduced correspondingly. Feldstein favors a complete switch to a fully funded, privatized system of individual accounts.

The biggest problem with privatization, notes Matthew Miller, is figuring out "how to get from here to there. The trick in switching midstreamfrom 'pay-as-you-go'

to a pre-funded private retirement system is that one generation has to pay twice: first for the retirement of its parents and then for its own.... Chile, whose successfulprivatizationof Social Security these reformers love to tout, paid for the change thanks in part to the five percent of GDP bud- get sutplus they were running when they switched. No such luck here."

Deregulation has come to telecommunications, airlines, and other industries, and now it seems to be the electric utility industry's turn. Traditionally, electric power has been supplied by tightly regulated local utilities that enjoy government-sanctioned monopolies. Some 200 such utilities today provide three-fourths of all the electric power in the United States. "But that monopoly system is about to break up," reports Arrandale, a freelance writer.

In high-rate states such as California (where the price of electricity is roughly 50 percent above the national average), major industries have been seeking to cut their electric bills, and even threatening to move out of state. In 1992, Arrandale notes, Congress "cleared the way for unregulated private companies with efficient gas-fired generating plants to sell power to wholesale customers [i.e. utilities themselves] at cheaper prices. This year, the Federal Energy Regulatory Commission ruled that these discount competitors must be allowed to use the long-distance transmission grids that the utilities have built to carry power across the countryside." Now, the unregulated companies want states to give them "access ... to the poles and wires along the streets and highways of virtually every community in the country." Massachusetts has already embraced the concept, and small-scale experiments are under way in Michigan and Maine. Meanwhile, mergers have sharply increased, as companies seek to cut costs and gain control over large regional markets.

In the debate over how far and how fast electric utility deregulation should go, two issues stand out:

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