Our country could profit from an honest debate about the future of Social Security. Judging from President Bush's State of the Union address, that is not the kind of debate we are about to have.
The president wants to use real but quite solvable problems in Social Security financing as an excuse for radical changes in the program. If Bush were to admit the simple fact that the shortfall in the Social Security trust fund is at most 0.7 percent of gross domestic product over the next 75 years, his alarmism would fall flat. So he has decided to exaggerate and mislead by way of frightening the American people, especially the young. It's bad politics, worse policy and a terrible shame.
(Larry Downing -- Reuters)
That is why you heard that loud chorus of "No's!" on Wednesday night that temporarily made the usually decorous House chamber sound like the more raucous British Parliament. Even Bush's foes and critics could not believe how far he was willing to go. "By the year 2042, the entire system would be exhausted and bankrupt," the president said at one point. Later, he offered a scene from "Nightmare on Independence Avenue" with the following scary thought: "If you've got children in their twenties, as some of us do, the idea of Social Security collapsing before they retire does not seem like a small matter. And it should not be a small matter to the United States Congress."
Bankrupt? Collapsing? That is nonsense. By 2042 (or 2052, according to the Congressional Budget Office), Social Security will still be able to pay between 70 and 80 percent of promised benefits -- which, because of wage indexing, would be higher in real terms than today's benefits.
Moreover, Bush was not willing to say in detail what he would do to solve the problem he kept harping on. Republicans clamoring for Democrats to put forward a Social Security plan might first ask their president, the man who says this matter is so urgent, to put forward a lot more specifics than he has.
Bush never said directly that he would propose cuts in future Social Security benefits. He hid behind past statements by former Democratic members of Congress to suggest that he was offering particulars without actually doing so. And some of those statements were opaque, as in: "Former congressman Tim Penny has raised the possibility of indexing benefits to prices rather than wages." You'd never know that the shift the former representative from Minnesota described would lead to a substantial cut in future benefits.
Nor did Bush mention that his plan to create private accounts would require large-scale government borrowing to cover the transition costs. (If the federal government collects less from the payroll tax by putting some of the money into private accounts, cash to pay current benefits has to come from somewhere.) The White House official briefer acknowledged before the speech that counting interest costs, the government would have to borrow $754 billion between now and 2015. Over the following 10 years, according to the Center on Budget and Policy Priorities, privatization would add more than $2.5 trillion to the debt. And by pulling some of the payroll tax out of the Social Security trust fund, Bush would actually bring closer the date by which the fund would stop showing a surplus.
The president insisted that "our children's retirement security is more important than partisan politics." Well, yes. But if the president were genuinely interested in a bipartisan compromise, he would put everything on the table -- including his own tax cuts that have added to the budget deficit. Consider that the cost of making Bush's tax cuts permanent is roughly three times the size of the Social Security shortfall over the next 75 years. Rolling back Bush's tax cuts just for those Americans who earn more than $350,000 a year would come close to covering the shortfall, according to the Center on Budget and Policy Priorities. It noted that the CBO's more modest estimates of the shortfall suggest that rolling back the tax cut for those high earners would more than cover the entire problem.
If President Bush believed that the Social Security situation was as dire as he says it is, wouldn't he be willing to revisit a part -- hey, a smidgen -- of his own tax cut? If he is not willing to do that, could it be that he doesn't really believe that the Social Security problem is as bad as he says it is? Are we to cut Social Security, create these private accounts and go further into debt just to make the world safe for all of Bush's tax cuts?