WASHINGTON -- The president's second term will begin Thursday, probably with a flurry of the usual flattery, such as: ``My fellow Americans, America is wonderful because you, the people, are wonderful -- the way you wear your hats, the way you sip your tea.'' But his term also begins with Republicans evidently thinking people must be frightened into accepting sensible Social Security reform, and Democrats invoking chimeric ``risks'' to frighten people away from a reform that enlarges freedom by reducing the degree to which people are wards of government.
The president says Social Security should be reformed because it is in ``crisis.'' That is an exaggeration. Democrats say it should not be reformed because there is no crisis. That is a non sequitur. Social Security should be reformed not because there is a crisis but because there is an opportunity.
What constitutes a crisis is a matter of opinion, and everyone is entitled to his or her own. But not to his or her own facts. Here are some:
Social Security outlays may exceed revenues by 2018 -- that date almost certainly will recede further into the future, as it has before, as the economy outperforms expectations. After that, the government bonds that Social Security surpluses have bought (funds used to fund the government) will be entirely redeemed, as the Social Security Administration calculates, by 2042. Or 2052, according to the Congressional Budget Office, using different assumptions about the rate of economic growth. That depends partly on the rate of productivity growth: might a growth rate unusually high by historic standards become normal? Immigration rates will affect the ratio of workers to retirees.
Some persons warning of a distant Social Security crisis postulate 75 years of 1.8 percent annual growth. But if America has 75 such sluggish years, Social Security's insolvency will hardly be the nation's largest problem -- and personal retirement accounts will reflect, not compensate for, the stagnation.