Despite the rhetorical drubbing President George W. Bush has taken from Democrats and others opposed to his plans to reform Social Security, the president actually might still have the upper hand. The system’s trustees reported last month that the date of doom — the year Social Security pays out more than it takes in — has moved up a year, from 2018 to 2017.
“Also creeping nearer, from 2042 to 2041, is the date by which the system will no longer have the ability to pay benefits at promised levels,” according to a Knight Ridder report. Those dates are not that far away, at least not from a retirement-planning perspective.
The Democratic response has been hard to fathom. Sen. Harry Reid, D-Nev., speaking for the Democratic Senate minority, argued that the “report confirms that the so-called Social Security crisis exists in only one place: the minds of Republicans.” He doesn’t see the one-year move-up as particularly significant. Things are fine, stable. In fact, many Democrats argue there’s nothing to worry about because by 2041, the system will still be able to provide about 75 percent of promised benefits.
Imagine if Republicans had proposed a “reform” that would have slashed retiree benefits by a quarter. That would have been portrayed as an unconscionable action, the imposition of a severe hardship on the Social Security-dependent elderly. Yet opponents of the Bush proposal say it’s no big deal if a similar thing happens by default.
No doubt, opponents of the president’s plan have scored some political points at his expense in recent months, thanks to an advertising blitz by Democratic allies that portrays Bush as pursuing something risky and dangerous. This is demagogy.
Diverting a portion of Social Security dollars to private retirement accounts is a sound principle, one that creates owned assets and undoubtedly will yield a better rate of market-based return. The current system is mainly a wealth-transfer program from working-age to older Americans. It is not an insurance program. So we support the Bush administration in pushing in a market-based direction.
But by the administration’s own admission, the individual account portion of the plan will not solve the fundamental fiscal problems, at least not for several decades, because the administration has promised to make good on all of Social Security’s promises to the older generation. Congress and the president will still be faced with one of three tough choices: raising taxes, reducing benefits or running up the deficit.
So more debate and more specifics are still needed. But credit the Bush administration for using some of its political capital to create the debate on a subject the president’s opponents would foolishly ignore. Too bad the public might not yet be receptive to the idea.