Social Security is broken, and there's no use pretending otherwise. President Obama sounded Wednesday like he was open to the idea of limited reforms to the New Deal-era's signature entitlement program. "There are those who believe we shouldn't make any reforms to Medicare, Medicaid or Social Security," said the president. "But I guarantee that if we don't make any changes at all, we won't be able to keep our commitment to a retiring generation. ..."
Yet the White House talking points from the event dispel any illusion that Mr. Obama is actually interested in doing anything now: "The president does not believe that Social Security is in crisis nor is a driver of our near-term deficit problems." That might come as a surprise to the Social Security Board of Trustees, who reported last year that benefit payments outstripped program income by $41 billion. That amount wipes out the deficit reduction in the budget deal Congress passed Thursday, which the Congressional Budget Office now says will reduce federal outlays by $20 billion.
Social Security's deficits will explode as the baby-boom generation retires without enough young people in the workforce to keep the pyramid scheme propped up. It's easy to look at demographic data and know Social Security's reserves will be exhausted by 2037. The full cost of the promises made to future generations add up to $16.1 trillion in funds the program simply does not have.
Freshmen Sen. Rand Paul of Kentucky and Sen. Mike Lee of Utah joined Sen. Lindsey Graham of South Carolina in introducing a bill to stop this runaway debt train. "To stick our head in the sand and do nothing is really a mistake," said Mr. Paul at a press conference held just before the president's speech. The Republican trio set out not to remake the Social Security program into something with private accounts and other free-market incentives, but to produce a compromise that shores up the program for the next 75 years without raising taxes.
The mechanics of the legislation are straightforward. They would gradually increase the age of full retirement to 70 by 2032 and early retirement to 64 by 2028, reflecting the increase in the average life span since the 1940s.
Benefits would be means tested so that "the rich" would receive less money than they put into the system. It sounds like the sort of progressive idea Democrats ought to embrace, but they don't. "Harry Reid said Social Security is fine, call me in 20 years," Mr. Graham explained. "If you wait two years, our plan won't work." That's fine with Democrats eager to exploit the fears seniors have of being cut off, even though nobody nearing retirement now would lose assistance under the reform proposal. Democrats don't seem particularly worried that the consequence of waiting is that the only option for retaining promised benefits would be to impose several trillion dollars in new taxes.
House Budget Committee Chairman Paul Ryan, Wisconsin Republican, was ambitious in going after Medicare and Medicaid reform in his 2012 budget. That's half the battle. Republicans also need to get fully behind the Social Security reform effort before it's too late.
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