The Social Security system is not in crisis, but the Bush administration wants you to think it is so you will be open to the idea of reforming it, and even though it's not in crisis the idea of fixing it before it breaks is a good one, although the fixes likely to be proposed by the Bush administration are not necessarily the right fixes to make.

Got that? It may be the simplest sentence you read on the subject this year. But bear with me, this is important stuff, so let's get out our John Madden telestrator and go through it in slo-mo.

Let me say going in that I think of Social Security as one of the things the United States does right. For almost one-third of our history, we the people have promoted the general welfare by building this girder into the structure of our economy and government. President Bush talks about an ownership society. Social Security is a proven means of ensuring that every American has an irrevocable share in that society. If there was ever an issue that should transcend politics, this is it. Now let's break down that opening sentence.

Part One: The Social Security system is not in crisis. It is not in imminent danger of going broke, and if left untended will probably remain solvent until at least 2042. In fact, given the (wisely) conservative projections made in the past, Social Security is by some measures healthier than anticipated. And some of the problems held up as proof that things are about to get really bad -- the increased life span of Americans since the program began in the 1930s, the demographic bulge of the retiring baby boomers -- have been anticipated and addressed already. None of which means it's time to do nothing, only that we can catch our breath, figure out what we really want to do and why, and set about doing it.

Part Two: The Bush administration wants you to think a crisis is at hand so you will be open to the idea of reforming Social Security. This is not conjecture or political spin on my part, this is stated intent. As senior White House staffer Peter Wehner put it in a memo leaked to the press in early January, the "political strategy" is "to establish an important premise: the current system is heading for an iceberg." Marketing and hype are as American as, well, Social Security, and that's the way the game is played. But there is an unsettling undercurrent here, too -- the plan seems to be to convince people that Social Security is doomed in order to remake the program, not just repair it. The memo talks about using the opportunity to "transform the political and philosophical landscape of the country." Hold on a minute -- I thought we were just trying to keep grandma from having to eat cat food.

Part Three: Even though Social Security is not in crisis, the idea of fixing it before it breaks is a good one. Bush is doing a good and proper thing by putting this on the agenda. Complex systems require dynamic management, and there are a lot of moving parts here. As noted, previous maintenance has helped keep some harbingers of impending catastrophe at bay; we should keep the machine in tune. Meanwhile, we need to be aware that some past remedies, like raising payroll taxes, are not infinitely repeatable.

Part Four: The fixes likely to be proposed by the Bush administration are not necessarily the right fixes to make. Private investment accounts that allow people to buy stocks seem to be the way Bush is headed, with the idea being that the market will yield larger payoffs over time than the current system. But by the time you pay brokerage fees and the government borrows the money (we're talking trillions with a "t") to cover what gets pulled out of the current system, you've offset projected gains and added risk to what is meant to be a guaranteed program. Social Security should provide the solid base of the asset pyramid, not the investment capital at the top.

I do think the markets may offer long-term growth that could help Social Security remain solvent and healthy, but the answer isn't converting it into private 401(k) plans. One solution could be putting some money into index funds that track the broad equity market and charge minimal fees. That would avoid the potential problem of direct government ownership of particular stocks and help keep costs under control. I'd also like to see the tax code make it easier for people to save money on their own -- all while bearing in mind that finding the money at a time when deficits are high and a program like Medicare really does face desperate problems will be tough.

Social Security will be a huge test for George W. Bush, a measure of his ability to look beyond ideology to achieve something of lasting importance. In one direction lies a problem unresolved and a political defeat on a scale with the Clinton health plan. In the other, perhaps, lies greatness.

Edward Cone (www.edcone.com, efcone@mindspring.com) writes a column for the News & Record most Sundays.

Subscribe today | Electronic archives

 Tell someone about this page

 Print this article

© News & Record 2005