- The Washington Times - Monday, June 18, 2001

The Presidents Commission to Strengthen Social Security, a group of 16 men and women appointed by President George W. Bush in May and charged with reforming todays unsustainable system, held its first meeting last week. In appointing former New York Democratic Sen. Daniel Patrick Moynihan and AOL Time Warner chief operating officer Richard Parsons as co-chairmen of the commission, Mr. Bush indicated he expected the commissions recommendations to be made "later this fall," a timetable that could place the issue at the top of Congress agenda in 2002, an election year when control of both bodies of Congress will be fiercely contested.
The challenges facing the commission are huge. Indeed, Social Securitys long-term problem an unfunded liability of $20 trillion, which represents the amount by which promised benefits over the next 75 years exceed expected payroll taxes are not susceptible to quick fixes. The only conceivable way this unfunded liability can be addressed is to increase the abysmal rate of return that todays pay-as-you-go system offers. And the best way to do that is to introduce voluntary personal investment accounts as part of a workers Social Security retirement package.
Messrs, Moynihan and Parsons know this is true. Indeed, it is true irrespective of the demagoguery that Democrats have predictably mounted in a special election to be held tomorrow for a U.S. House seat in southeastern Virginia. The odious tactics Democrats are deploying in Virginia include a TV commercial that asserts personal investment accounts in the stock market will cause heart attacks. For political gain, Democrats seem determined to instill nothing less than the fear of death in current and soon-to-be retirees, who need not participate in the voluntary program that would reform Social Security for their grandchildren.
Writing recently in the Wall Street Journal, Messrs. Moynihan and Parsons demolish the belief that Social Securitys problems can be solved by the Band-Aid approach: "Before all else, lets be clear about one thing," the two co-chairman declare. "The challenge facing Social Security isnt the figment of some statisticians overheated imagination or" as most Democrats would charge "a political ploy. The challenge is real and can best be summed up in a single word: demographics."
The co-chairmen point out that the pay-as-you-go Social Security system, which was established in 1935, was problem-free 50 years ago, when there were 16 workers for every one retiree. Today, there are only three workers for each retiree, and in 30 years there will be only two workers for each retiree. Moreover, in 2016, benefit payments will begin to exceed payroll tax revenue; after that, the IOUs in the Social Security Trust Fund will have to be redeemed. But these IOUs are not real assets. They are merely promises to pay. There are only four ways they can be redeemed: The federal government can either raise taxes, reduce benefits, increase borrowing or decrease other spending. In any event, the IOUs in the so-called "trust fund" will be exhausted by 2038. Then it really gets dicey.
Addressing these challenges, the commission co-chairmen argue, means "putting aside ideology … and rejecting inflammatory rhetoric or scare tactics." Presumably, that would include linking Mr. Bushs preferred solution the establishment of voluntary personal investment accounts funded by, say, 2 percentage points of the 12.4 percent Social Security payroll tax. But dont bet the Democrats will take the advice and abandon their demagoguery.

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