Sinking Social Security

Social Security is not "heading for an iceberg." Minor adjustments could fix the program without the risks inherent in the president's privatization plan.

A Times Editorial
Published January 9, 2005

President Bush is planning an election-style campaign to convince Americans they should "reform" Social Security by allowing workers to put some of their retirement money in the stock market. Critics of his privatization plan say "dismantle" is a more accurate description of what Bush wants to do to the 70-year-old retirement program. What are Americans young and old to think?

It doesn't help the campaign's credibility that it is based on a faulty premise - that Social Security is in imminent danger of financial failure. Actually, as government programs go, Social Security is the picture of stability. Yes, demographic changes in the coming decades - more retirees, fewer workers - will strain the system. Yet even the most sober projections say payroll taxes alone will sustain the program until 2018, and the accumulating trust fund, which is invested in treasury bonds, will support the current schedule of payments at least until 2042. Adjustments that are far more modest than Bush is expected to propose could extend the solvency of Social Security indefinitely.

So what's the rush to replace a program that offers predictable, steady retirement income with one that is more speculative and based on Wall Street's boom-and-bust cycles? The answer is not clear, but there is evidence that Bush's emphasis of the issue has more to do with ideology than economics. Two conservative organizations backing the campaign - the Heritage Foundation and Cato Institute - have long been hostile to Social Security. Along with the Club For Growth, whose fundraising activities usually help elect conservative Republicans, they are putting their considerable resources into the effort.

A recent memo on the subject from Peter Wehner, Bush's director of strategic initiatives, sets a partisan tone. "I don't need to tell you that this will be one of the most important conservative undertakings of modern times," he wrote to selected supporters. The memo also reveals the coming strategy, including speeches "to establish an important premise: the current system is heading for an iceberg." <snip>

http://www.sptimes.com/2005/01/09/Opinion/Sinking_Social_Securi.shtml