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Social Security solvency


THE SOCIAL Security system has a solvency problem. Over the next 75 years, with no changes, promised benefits will exceed estimated income by about $3.7 trillion. Social Security can keep paying all scheduled benefits for another 36 years, according to projections, but its annual surpluses run out in just a decade or so - highlighting the need for Washington to get serious about a comprehensive fix.

The stakes can't be understated: Social Security, according to a recent study for the Economic Policy Institute, is the largest income source for two-thirds of those over 65. For most Americans, lacking private pensions and big 401(k) savings, Social Security is the foundation of retirement security.

Against that backdrop, President Bush should be credited with raising this year the issue of shoring up the system now. Trouble is, the president and fellow conservatives have been more serious about their political ends - more serious about changing a successful social insurance program than they are about saving it.

First Mr. Bush pitched diverting some Social Security taxes into private accounts, thereby asking future retirees to trade guaranteed cuts in benefits for the chance to regain the money in stocks. In this case, personal responsibility boils down to investing with a loan from your old-age annuity.

Then the president dropped the other shoe, balancing Social Security's books with wage indexing that would mean big cuts in scheduled benefits for anyone making over $20,000 this year. This would turn Social Security into a welfare system, for which middle-class Americans increasingly have little taste. How convenient for those still trying to undo the New Deal.

And with all this roundly rejected by Americans, conservatives in Congress last week came up with the worst plan yet: Do nothing to fix Social Security's shortfall, while diverting its surpluses - until they peter out in 2017 - to private accounts. If the goal here is to get the camel's nose under the tent, the cost would be high, the loss of $600 billion in surpluses that likely would be used to reduce federal budget deficits. And get this: It is being sold as a sort of "lock box" to prevent Social Security revenue from being drained off by federal deficit spending - a fantastic turn for the party whose irresponsible tax cuts and spending have led this nation in just five years from surpluses to record red ink.

Democrats can be criticized for not coming forth with their own plan to fix Social Security, but in all fairness, they've had a stream of bad ideas to confront from the party in power. Any solution will be the product of tough negotiations. Why open the give-and-take with extreme plans that would essentially dismantle the system?

There is a vast middle ground here that has not yet been touched. Social Security can be put on sound footing with a mix of limited tax increases and some benefit cuts - the sooner the better. But arriving at that solution is nearly impossible when one party would rather kill the system than save it.

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