Perspective: Social Security untruths

President Bush's Social Security commission fosters needless insecurity. But while his push for privatization is at best premature, some small adjustments now would help.

The commission appointed by President Bush to find ways to save Social Security will be lucky to save itself from irrelevance. What Americans needed was an honest assessment of the program and some reasonable choices to put it on solid financial footing. Instead, the commission lived up to its detractors' expectations, producing a slanted report that tries to scare working Americans into accepting Bush's fuzzy privatization talk.

Without action, the report warns darkly, "painful tax increases, significant benefit cuts or astronomical levels of borrowing" are inevitable. Sufficiently worried, we are then tempted with the alternative of "wealth accumulation and long-range investment," the commission's rosy view of putting a portion of Social Security taxes in the stock market. Has the commission been reading the financial pages lately?

Democrats and the AARP pounced on the report. "This may actually move us further away from a solution rather than toward a solution because it will be perceived as extremist," said John Rother, legislative director of AARP, the retiree advocacy group. Yet in denouncing the commission's tactics, neither group stepped forward with a better idea.

Contrary to the commission's tone, Social Security is currently on solid financial footing and there is no need to panic or act hastily. Contrary to the Democrats' protestations, the sooner Congress improves the system's financial underpinnings, the less painful it will be.

Social Security is vital to most retirees. Two out of three count on it as a major source of income, and for one in three, it is their only income. Nearly half of all elderly Americans would live in poverty without Social Security. In addition to retirement benefits, the program provides disability insurance and survivor benefits to those who would otherwise have none.

Over the years, Social Security has built a $1.1-trillion trust fund that has been invested in U.S. Treasury bonds. That means when payroll taxes no longer cover payouts to retirees (in 2016), the trust fund will still keep the program afloat until 2038. So Social Security is not on its last leg. One of the commission's most nefarious findings is that the federal government might not feel compelled to repay the debt when it comes due because that could raise taxes. It is unthinkable (or it should be) that Congress would refuse to fulfill its obligation to Social Security or to the holder of a Treasury bond.

But the commission is right when it points out demographic changes that will challenge the program. With Baby Boomers nearing retirement and Americans living longer, the ratio of workers to retirees is shrinking. In 2050, the commission estimates, there will be just two workers for every retiree.

That means payroll tax increases, reduced benefits and delayed retirement -- along with investments in the stock market -- all will have to be considered to truly reform Social Security. Small adjustments now would go a long way toward extending the system's solvency. But we're unlikely to hear politicians of either stripe say so.

Bush's vague privatization plan makes no sense on its own. Any money diverted from current workers' Social Security payments will hasten the need to dip into the trust fund. While such investments might boost the trust fund's returns over time, they carry risk in the short term. If the president had wanted to make a dramatic statement in support of Social Security, he could have earmarked the federal surplus to the trust fund rather than give it back in tax cuts.

So, in the tug-of-war between Republicans who lack respect for Social Security and Democrats who close their eyes to its flaws, we are back to where we started. Even the addition of former Sen. Daniel Patrick Moynihan, an acknowledged expert on the subject, didn't save this commission.

It's a missed opportunity, but we will have to wait for another commission to tell Americans the truth about Social Security.

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