Editorial: A ‘crisis’ in name only

Monday, Feb. 21, 2005 | 8:52 a.m.

President Bush has called for the partial privatization of Social Security, saying that workers should be allowed to invest part of their payroll taxes in the stock market. But the president has been vague regarding just how he would pay for such a radical change, which economists estimate could cost from $1 trillion to $2 trillion over the first 10 years that it's implemented. Instead, the president contends, he should first explain to the American people just how dire the situation is before he lays out a full plan. Additionally, Bush has said, he wants to entertain all responsible ideas for ensuring the solvency of Social Security and believes Congress should take the lead in writing the legislation.

The president is being disingenuous, however, when he suggests he is being open-minded on Social Security. To begin with, even though Bush paints a bleak future of Social Security, there is no consensus whatsoever among economists that a crisis exists as he suggests. It wouldn't be until 2042 at the earliest -- and that's a conservative estimate -- that the government would reach a point of having to reduce full benefits. A further indication that Bush is closed-minded on Social Security is that he already has said that workers should be allowed to invest their payroll taxes in the stock market -- a dramatic departure from the current system where retirees receive a guaranteed benefit.

Bush also has refused to entertain raising payroll taxes as a possible solution, although last week he said he would consider raising the cap on payroll taxes that currently exists. The payroll tax that funds Social Security only is assessed on the first $90,000 in annual wages, a cap that favors wealthy Americans. Even though Bush was careful not to endorse raising the cap on payroll taxes -- saying only that such a proposal should be on the table -- Republican leaders in Congress immediately denounced it as nothing more than a tax hike. Democrats, meanwhile, weren't about to endorse the trial balloon because they believed it was a trap laid for them by Bush, enabling Republicans to call the Democrats tax-and-spenders if they had endorsed it.

What's really going on here is that Bush won't lay out a complete plan because he is afraid to take the heat. That's because he knows if he were to actually reveal the pain that such a plan would cause -- whether it's reducing benefits or further burdening our already overwhelmed federal deficit to pay for privatization -- the plan would go nowhere. Instead, he'll try over the next several months to fool Americans through scare tactics into thinking a crisis exists. We don't believe the public, however, will be gullible enough to buy into this nonsense.