George Will

     The Financial Times' Andrew Balls and James Harding report that ``even using the infinite horizon model, the unfunded liability is only 1.2 percent of future gross domestic product.'' Assuming, which of course we cannot do, that we know the future GDP. And America's future birth and immigration rates, which will influence not only economic growth but also the ratio of workers to retirees.

     The Social Security trustees assume that 10 years from now economic growth will slow to 1.8 percent -- about half the average growth rate since the Civil War -- and will remain that low until 2080. How do they know? They don't.

     Surely the beginning of wisdom is to begin not with such speculations but with the question asked, in a Wall Street Journal essay, by Edward C. Prescott, co-winner of the 2004 Nobel Prize in economics: ``If we could wipe the slate clean, what kind of government retirement program would we build from scratch today?'' In no 15-year period in the last eight decades has the growth of stocks ever been negative; in no 20-year period has the average growth been less than 3 percent, which is better than the rate of return on Social Security assets. So if we were starting with a clean slate, surely we would consider some use of the market to be prudent rather than risky.

     We see next month -- never mind the next 75 years -- as through a glass darkly. But surely it is prudent to assume the need, and reasonable to rejoice in the opportunity, to restructure a program that was designed during the Depression, when there was excessive pessimism about the prospects for American capitalism and there were more than 40 workers for every retiree.

     The political problem is this: Even if the future were knowable and we knew that the Social Security solvency problem actually is smaller than Bush assumes, he would still favor reform involving personal accounts funded by a portion of payroll taxes. He believes such reform would be conducive to civic virtue, as conservatives understand that -- individualism, self-reliance, limited government. Unfortunately, it is difficult to get many Democrats to toss their caps over the wall for that.

George Will

George F. Will is a 1976 Pulitzer Prize winner whose columns are syndicated in more than 400 magazines and newspapers worldwide.
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