Social Security: Get Going

The one thing Democrats and Republicans can agree on when they talk about keeping Social Security solvent is that the time to act is running out. Unless a plan is agreed on early in the next session of Congress, before campaigning for the 2000 election comes to dominate the agenda, the chance to restructure the nation’s most popular social program is likely to sink in a sea of partisan bickering, leaving the problem not just unsolved but fated to grow steadily more onerous.

The first need is for a fiscally responsible proposal to keep Social Security healthy in the coming era, when more than 70 million baby boomers will claim their share of its benefits. That proposal has to come from President Clinton, who until now has limited himself to encouraging discussion about salvaging the program--as at this week’s White House conference--without committing himself to any of the ideas being aired.

His aides suggest that Clinton will have something to say in his State of the Union next month. But that is not an assurance that he will have settled on a specific plan. One problem is that Democrats aren’t agreed on what ought to be done. Some are dead set against allowing any portion of payroll taxes to be invested in stocks or bonds, which historically have earned more than the low yields that Social Security surpluses get on government bonds. Other Democrats are ready to embrace limited personal investment accounts, provided they are managed by the government. Republicans generally favor some form of privatization, with some eager to see payroll taxes invested entirely in the market.

The countdown has inexorably begun. Social Security is a pay-as-you-go system; payroll taxes from today’s workers become benefits for yesterday’s retirees. But the worker-retiree ratio has steadily shrunk, meaning too few dollars are coming into the system. By 2013 spending will exceed payroll taxes. By 2032 the Social Security trust fund will be empty, and payroll taxes will be able to meet only about 75% of the system’s obligations.

There are only three ways to fix things: boost payroll taxes, which is highly unpopular; cut benefits, which is no less so; earn more on Social Security’s investments--the preferable option. The problem and its proposed solutions have been argued over for years. It’s time for Clinton to take the lead in eliminating it by offering a plan that will be fair to workers, fair to retirees and crafted to avoid another Social Security solvency crisis for many decades to come.