THE PRECARIOUS state of President Bush's push to overhaul Social Security raises the prospect of two unwelcome outcomes. The first is that reform will be shelved altogether, and the program's undisputed unaffordability ignored once again. The second is that the unaffordability will be made worse by some cotton-candy additions dressed up as reform. One pushes the problem down the road, when everyone knows it will be more painful to solve. The other pushes the problem down the road and makes it worse in the process. You could think of Example A as the Clinton health care plan; Example B is last year's exorbitant Medicare "reform."
The challenge of Social Security is not going to go away on its own. The inexorable demands of the demographic bulge mean that, at some point, the program will not have enough money to pay promised benefits. Addressing that shortfall now will take far less drastic steps than dealing with it in the future; the choice, which neither side wants to acknowledge, is between some pain now and more pain later. Democrats may score a short-term political victory by killing the president's plan, as Republicans did with the Clintons' health care proposal. But if that happens without anything being done to address the underlying solvency questions, the country will be worse off.
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The prospect that Social Security will turn into Medicare II is even scarier. The Medicare bill ended up providing a pricey new benefit without doing much to control costs. Now, the drive for Social Security personal accounts at any cost may lead to personal accounts at too high a cost: Rather than having personal accounts as the sweetener to help the medicine of benefit cuts go down, the accounts may be provided without requiring any reduction in benefits. Digging the hole deeper would be even more irresponsible than ignoring it.
The Social Security discussion is heading in the wrong direction because it is starting from the wrong principle. The fundamental questions that Congress and the administration ought to be tackling are, first, how to put the program on a sound footing, and second, how to do so while protecting those in greatest need. The administration is dangling the prospect of personal accounts without advancing a proposal to achieve solvency. The Democrats are closing their eyes and sticking their fingers in their ears. Neither approach will get us very far.