Finally, someone in government is leveling with the American people about the future of Social Security. Unfortunately, it's a member of the Democratic minority.
As President Bush appears before hand-picked audiences spreading fear about a bogus financial crisis in order to peddle a costly scheme to replace fixed benefits with individual investments, a grownup in Congress is admitting some hard facts. Social Security is not in deep trouble, but it does need tweaking to keep future revenues in line with future benefits.
And the most likely way the system will be tweaked is the way it was done in 1983. That's when a commission appointed by President Reagan, and headed by Alan Greenspan, adjusted both taxes and the retirement age upward, putting Social Security on the sound financial footing it still enjoys today.
In 40 or 50 years, it will lose that footing, however. The best way to prevent that without making drastic changes is to do it sooner rather than later. And yes, that probably includes some reduction in future benefits.
So says Rep. Charles Rangel of New York, the top Democrat on the House Ways and Means Committee.
"If the Democrats were in charge, benefits would have to be altered," Rangel says. "You cannot fix the system without pain, no matter how much money you borrow."
Borrow? Rangel of course refers to the Bush administration's apparent plan to push the nation deeper into debt to finance the investment accounts the president wants to add to Social Security. Whether the government does that honestly, by adding the borrowed money to annual deficits, or otherwise, by putting the borrowed money "off budget," the investment accounts will not replace the monthly benefits owed to people already retired or nearing retirement.
Those accounts will be for younger people, with the earnings to replace benefits they would otherwise receive under the current system.
Whether the accounts are a good idea is an ideological question, not an economic one. With or without them, the government will still need to change revenues or benefits, and most likely both.
If a Democrat like Rangel is willing to admit that, what's keeping the president from doing the same? -- J.F.
Quote of note
"President Bush is like a financial adviser who tells you that at the rate you're going, you won't be able to afford retirement -- but that you shouldn't do anything mundane like trying to save more. Instead, you should take out a huge loan, put the money in a mutual fund run by his friends (with management fees to be determined later) and place your faith in capital gains." -- Princeton economist and New York Times columnist Paul Krugman
