Bush rhetoric not good for debate

President Bush is holding a series of townhall forums to build public support for restructuring Social Security. His spokesman, Scott McClellan, says the forums’ “first step is to make sure that we have a common understanding of the problem facing Social Security.”

But last Tuesday, President Bush demonstrated an uncommon understanding when he told Josh Wright, a 27-year-old Utah dairy farmer: “At your age, Social Security will be bust by the time it comes for you to retire.”

Wright will turn 65 in 2043. Using historically low economic growth projections, trustees for the Social Security Administration say that if no changes are made, full benefits can be paid up to 2042. The Congressional Budget Office, using slightly less pessimistic growth numbers, says full benefits can be paid until 2052. After that recipients would get 70 percent to 80 percent of the scheduled amount for decades to come. But that total will still exceed what current recipients get, even when adjusting for inflation. Social Security needs tweaking at some point, but the system is not in crisis, and under no believable scenario will the system “be bust” in Josh Wright’s lifetime.

In an earlier session with young people, Bush said: “You realize that the system of ours is going to be short, the difference between obligations and money coming in, by about $11 trillion unless we act.”

The president is referring to 2018, when the amount paid in benefits will begin to exceed the amount raised from the payroll tax. It’s true that at that point the system will have to tap its reserves, but the president doesn’t mention that revenue source.

In 1983, the Social Security Commission, headed by Alan Greenspan, saw this declining ratio of workers to retirees coming and designed a system that would bring in surplus revenue. Congress and President Reagan signed onto an increase in the payroll tax to finance this change. Ever since, the surplus has been invested in government bonds.

Some critics have called those bonds “worthless IOUs,” but that would be news to those who hold them. The U.S. government has never defaulted on its bonds, and if it did it would precipitate a worldwide financial crisis. Social Security trustees say those bonds will allow the government to pay full benefits from 2018 to 2042. The CBO puts the date at 2052.

For the system to go bankrupt, the government would have to take two unimaginable steps: repeal the payroll tax and default on its bonds. Is that really the future the president sees? Is that a responsible picture to paint for today’s young workers? Clearly, the president would like to reform Social Security to make room for personal accounts that individuals would manage. That idea is certainly worth debating, but it ought to rise or fall on its merits.

The nation is chugging toward icebergs. Rising health costs and their effects on Medicare, Medicaid and the economy loom menacingly. But Social Security is over the horizon. The nation has ample time to change course.