Social Security needs attention, soon

It’s telling that those who want to keep Social Security just as it is can only offer the same old excuse: “There’s no crisis.” This rationale for rejecting the use of private investment accounts as part of Social Security reform comes from people who call themselves “progressive,” no less.

What their call for inaction really tells us is that they’re visionless reactionaries.

They can only see making changes to Social Security in reaction to a “crisis.” So they’ll wait it out, even though there are huge problems ahead for this entitlement program for retirees.

True, Social Security isn’t bankrupt — just yet. In as little as 13 years, by 2018, when the bulk of my baby-boom generation finally retires, Social Security reserves no longer are expected to be building up the system. By 2042 or maybe 2052, Social Security would no longer have the trust-fund assets to cover retiree benefits because the ratio of workers to retirees keeps narrowing.

Of course, those projections are conservative. They undercount the growth in immigrants, as compared to today’s reality, ignoring how immigrants can pump up the work force to help pay for retirees’ benefits. They also play down the potential for strong economic growth overall in the future.

Another valid point: If the government would stop borrowing from the plan’s “trust fund” surplus — remember Al Gore’s “lock box”? — to cover the cost of a slew of programs and all of those Bush tax cuts, Social Security would be healthy years longer. That argument, though, ignores the bigger issue of what Social Security should be in the 21st century.

Bottom line: Americans are being shortchanged. Social Security can be much more than it is today. That’s what Democrats should be looking at achieving. Instead, they simply want to protect a program out of some kind of misplaced nostalgia for what it meant to be “progressive” in FDR’s day.

There’s no dispute that Social Security, fashioned under President Franklin D. Roosevelt’s New Deal, is a compact with the elderly and has done more to help retirees keep a decent, though fast-eroding, standard of living than anything else. Coupled with Medicare’s health insurance benefits, Social Security has helped people over 65 keep their dignity. And those fortunate enough to have worked in companies that offer pensions, or to have earned enough to invest in markets, get extra “wiggle room” to enjoy their golden years — thanks to Social Security.

Yet Social Security could stand some major tinkering. It was fashioned during another time for another world. Today’s global economy demands a new look at a system that’s barely keeping up with inflationary pressures for those who count on it as their only retirement income.

Politically speaking, no administration or Congress in the future would let Social Security go bankrupt. They would be voted out of office. So in a sense, the word “crisis” is a loaded political term that President Bush employs precisely because he knows the political odds are that change will come only in reaction to a crisis — not because of needed forward-thinking.

It’s a shame that Bush has opted to use such disingenuous language to move the debate on Social Security forward. Both sides exaggerate for their own purposes.

The reality is Social Security reforms will require tough decisions about delaying retirement age, cutting back on benefits for those who choose to use a portion of their payroll taxes for investments and sticking tough to the promise that if markets tank, individual investors who opt out of a portion of Social Security won’t get bailed out by Big Brother. And the cost of transferring to a private system, even if the reform only allows workers to invest a small percentage of their payroll taxes, can’t be whitewashed. Whatever money workers take out of the system for investments will have to be made up by government in the short term to ensure that current retirees’ benefits continue.

The goal of allowing future generations to use part of their Social Security payroll taxes for private investment accounts is a worthy pursuit. How that’s done is what should matter.

It should be a system that helps the poorest worker make wiser decisions about investments and not just a system that serves the rich and middle class who are familiar with investing. Otherwise, we would be stealing the hopes of low-income workers to make the rich richer. That’s unacceptable.

I’m no Chicken Little on Social Security reform. Never have been. Nor do I cry wolf, as Bush is doing, on the current system’s viability.

The point is, we can do better for future generations — if only politicians on both sides have the gumption to dream big but tell it straight.