Redeeming redesign?

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President Bush's embrace of economist Robert Pozen's Social Security financing plan last week achieved two strategic results that put his troubled proposal back on track.

First, by endorsing Mr. Pozen's progressive solvency plan, Mr. Bush gave his personal retirement accounts proposal the aura of political bipartisanship it needs to counter the Democrats' war against it. A longtime Democrat who taught at Harvard, Mr. Pozen supported John Kerry for president in 2004 and has contributed to many of his party's candidates.

Mr. Pozen was a central member of the bipartisan presidential commission Mr. Bush appointed in 2001 to devise ways to carry out his reforms and was an ally of the late Sen. Daniel Patrick Moynihan, New York Democrat, who co-chaired the panel and backed the administration's proposal.

Second, by endorsing Mr. Pozen's long-term financing recommendation at a news conference last Thursday, Mr. Bush put a well-thought-out and fully workable solvency solution on the table -- the critical part of the Social Security fix he had left unaddressed in his initial proposal.

Mr. Pozen's plan doesn't just fix Social Security's future financing troubles, it resolves them about as far as the eye can see. Who says so? The nonpartisan chief actuary of the Social Security Administration.

In a detailed memorandum written on Feb. 10, Chief Actuary Stephen C. Goss said he crunched the numbers on Mr. Pozen's plan and found it would keep Social Security "solvent," meeting all of "its benefit obligations through the long-range period 2004 through 2078."

And if that is not enough to satisfy the fiercest deficit hawk, Mr. Goss added that Mr. Pozen's plan "would be expected to restore sustainable solvency for the program, that is, the program would be expected to be financially solvent for the foreseeable future." And it would do so without plunging the government and taxpayers deeper into debt, without hurting the most vulnerable lower-income Americans, without raising anyone's taxes and without touching the benefits of retirees or those who retire in the next decade or so.

However, while Mr. Pozen's plan retains Mr. Bush's private investment accounts concept, he proposes starting out at 2 percent of a workers' payroll taxes, half of Mr. Bush's 4 percent proposal. But that difference could be narrowed with some modest alterations in the financing system.

There were questions whether Mr. Pozen's plan would fly when he first presented his idea in a Wall Street Journal op-ed column. But it wasn't long before Mr. Bush was talking up the idea and, finally, last week, said he fully embraced it. Mr. Bush's core conservative supporters, after studying the fine print, endorsed it, too. "We very strongly support it," Heritage Foundation analyst David John told me.

"This would do two things, both of which are critical. First, this brings Social Security's promises close to what Social Security can afford to pay. Second, this focuses benefits on people who need it the most, the ones who are least likely to have other types of retirement plans," he said.