Social Security: O.K., Gang, Back To The Table
The politicos in Official Washington logged some notable accomplishments in 2005: bankruptcy legislation that made it more difficult to walk away from debts, the $14 billion energy bill that should spur more domestic production, and a $40 billion government spending reduction bill. And there's plenty of unfinished business that politicians and policymakers should tackle in 2006, including tax reform, immigration overhaul, and tighter regulation of lobbyists. But we'd like to urge the pols to concentrate their 2006 efforts on a far more unlikely (and politically treacherous) choice: Social Security.
O.K., call us naive for encouraging President Bush to revive an issue that last year earned him the kind of political shellacking not seen since Bill Clinton's ill-starred attempt to reform the U.S. health-care system. Indeed, after almost two years of independent commission reports and seemingly nonstop town hall meetings about the looming demise of Social Security, the Administration spin doctors have fallen as quiet as church mice on the topic. But we still believe this is a debate that deserves to be resurrected -- even though the politicians have moved on in search of better poll numbers.
True, the national retirement system may not exactly be in crisis as some Administration supporters all too breathlessly argued last year, but it's certainly an accident waiting to happen. Indeed, even most opponents of the President's attempt to carve out private Social Security accounts while reducing benefit levels didn't disagree with his central premise: The system's finances are unsustainable over the long haul. The key differences revolved around when the system in its current configuration would run out of money, not whether.
To revive this process, it's time for the White House to ditch all the glitzy "ownership society" wordplay and flatly tell the American people that the system needs some unpleasant -- but unavoidable -- preventive medicine if we are to maintain the system's (and the nation's) long-term health.
It's not hard to see why. At its inception, there were about 40 workers paying Social Security taxes for every retiree receiving benefits. Today there are three, and in about 30 years there will be only two. The Social Security payroll tax has risen to about 12% of most incomes, up from 2% at the start. Meanwhile, life expectancy in the U.S. has reached an all-time high of 77.6 years, which means Social Security likely will have to pay out benefits longer for each worker than contemplated when the system began. The bottom line: The system can probably muddle through for 30 years but faces a shortfall of $3.7 trillion over the next 75. The sooner we come up with ways to reduce that deficit, the better (and cheaper) for the long run.
Even fans of Social Security reform argue that the Bush Administration should hold off pursuing such risky legislation until its sagging poll ratings are higher. That's certainly good politics -- but it's bad policy, for two reasons. First, a prime reason for Bush's slide in popularity, the situation in Iraq, is unlikely to change dramatically anytime soon. Free elections have been staged, but there are still thorny issues -- like writing a constitution and dividing the nation's lucrative energy assets among its ethnic factions -- that could prolong instability there. In short, for the rest of President Bush's term, there will always be another mountain to scale in Iraq. So he cannot wait for sunnier days; he has got to move ahead boldly. The alternative, policy paralysis quickly followed by true lame-duck status, is simply unacceptable.
Second, the Administration's days are numbered. After the November elections, especially if the GOP's slim majority in either house shrinks sizably, it's less likely Bush will have the clout to tackle such a contentious issue. So he should act now to protect future retirees -- and taxpayers.
In his first term, President Bush surprisingly showed that a politician can touch the so-called third rail of American politics and survive. Now it's time for him to reopen that national debate on Social Security, this time scrapping the rhetoric about private accounts (which do little to solve the looming funding shortfall, anyway). Instead, Bush must accept the message the public sent loud and clear -- that Social Security should remain a safety net program rather than morph into an investment vehicle -- and lead the nation in finding ways to assure the program's long-term viability. Because any solution will likely contain a mixture of benefit reductions, longer work lives, or higher payroll taxes, that's a charge few politicians will want to lead. But if Mr. Bush is really serious about ensuring the long-term viability of Social Security, then what better legacy can he leave than being called the President who took on the entitlement program -- even when the smart political money advised him to cut and run?