Editorials

Saturday, July 21, 2001

Social Security overhaul
must take a careful
and balanced approach

The issue: A staff report by a Bush
commission has sounded an alarm that
Social Security is in need of radical change.

A commission assembled by President Bush to design an overhaul of Social Security has begun making its case, in alarmist terms. The commission staff asserts in a draft report that the system, born in the New Deal era 66 years ago, "has itself reached retirement age." While movement toward government-authorized private pension accounts may be desirable, a more balanced assessment is needed before Congress embarks on preparing for retirement of the baby boomers.

"The system is broken," the commission's chairman, former Sen. Daniel Patrick Moynihan, D-N.Y., and Richard D. Parsons, vice president of AOL Time Warner, declare in a preface to the report. "Unless we move boldly and quickly, the promise of Social Security to retirees cannot be met without eventual resort to benefit cuts, tax increases or massive borrowing."

Specifically, the report says that the system's payroll tax revenues from workers and employers will fall short of payments to retirees in 2016. However, that occurrence, which some analysts say will not arrive until 2025, means only that the system will have to begin redeeming government bonds that it holds. Those bonds will not be exhausted until 2038, at which point the system will be able to pay only about 72 percent of promised benefits out of payroll tax revenue.

Brookings Institution economist Henry J. Aaron calls the document an error-riddled "Chicken Little report." Rep. Robert T. Matsui of California, ranking Democrat on the Ways and Means Social Security subcommittee, said its only purpose "is to frighten the American public and to have the public think the system is about to fall apart. It's intended to make younger people think they're not going to get their benefits, so they should keep their money and invest it in a private account."

The staff report will be presented on Tuesday to the full commission, stacked to support a Bush proposal allowing workers to set up private accounts with some of their Social Security taxes. The president is expected to propose that the plan be voluntary and made available to workers 45 years and younger. Allowing payments to be siphoned off to private accounts could endanger the system during a critical period.

No one argues that problems have been created by the approaching retirement of the baby boomers, those born in 1946 through 1964, the largest generation in U.S. history. The strident tone of the report is not likely to gain public trust at the level that the system itself has earned through most of its life. Bipartisan and cross-generation understanding and support are needed before changes are made.

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Published by Oahu Publications Inc., a subsidiary of Black Press.

Don Kendall, President

John Flanagan, publisher and editor in chief 529-4748; jflanagan@starbulletin.com
Frank Bridgewater, managing editor 529-4791; fbridgewater@starbulletin.com
Michael Rovner, assistant managing editor 529-4768; mrovner@starbulletin.com
Lucy Young-Oda, assistant managing editor 529-4762; lyoungoda@starbulletin.com

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