Joel Mowbray
When George W. Bush boldly went where no Presidential candidate had gone before-proposing personal accounts for Social Security-conservatives and free market types were giddy at the prospect of true reform becoming reality. But as Bush's Commission to Strengthen Social Security (CSSS) holds it final meeting today, the dream is dead, at least for now. The spending spree that occurred in the wake of September 11th crushed any hopes surrounding the Commission's final actions on December 11th. The irony is that everyone knew that Bush's popularity would play a critical role in enacting reform, but now that he has high marks, there's no money to put in the personal accounts. Though even if the money were there, only one of the commission's three recommendations would've yielded positive press. The second and third options are plans only a political masochist would love. They require a Byzantine set of policy changes that in sound bite terms are merely benefit cuts. And in a world where we still have deceitful leftists who would rather lie than salvage the entitlement they claim to cherish, anything resembling a benefit cut sinks the whole ship. To measure the true level of evil of reform's opponents, consider that upon the release of a final rough outline by the CSSS last month, Rep. Nita Lowey (D-NY), chairwoman of the Democratic Congressional Campaign Committee, could barely wipe the saliva from her pursed lips. She pounced on the commission's responsible and carefully crafted proposals, saying that the report "could very well be an issue that some candidates will use." Given that no Congressional action is even remotely possible, Lowey was literally beating on a dead horse. Why did the CSSS paint a big, fat bull's eye on its report? Because President Bush made the tragic mistake of allowing them to propose benefit cuts. For the commission to propose any reduction in benefits not tied directly to personal account contributions is like a patient begging for a root canal. Fortunately, one of the commission's three plans is a minimal approach that only looks at what should have been the lone goal to begin with: establishing voluntary accounts paid for with current Social Security taxes. The cogent blueprint calls for a 2% carve-out, which means that 2% of income from existing payroll taxes is diverted to an account, with the remaining 10.4% going to Washington as it does now. The genius of this strategy lies in its simplicity. Because of its laser-like focus, the truth that personal accounts necessarily bolster Social Security will come to light. Hysterical leftists will have no concrete benefit cuts to point to, and the public will be able to see that personal accounts, on their own, improve the financial condition of the retirement program. Under the accounts-only proposal, a worker only needs his or her account to garner a 3.5% real rate of return to make up for the reduction in promised benefits tied to having a personal account. To fully appreciate how little risk there is, consider that the worst 20-year period in the market's history, which included the 1929 crash and the Great Depression, had a real rate of return of 3%. And if someone does not want even that negligible risk? That person could take his chances with the current system since the accounts are strictly voluntary. More important than how individuals fare with personal accounts, though, is the overall health of the entitlement. After all, if Social Security goes belly up, taxpayers are on the hook for a lot more, wiping out any possible gains from private investment. The retirement program is already on financial quicksand with its pyramid scheme structure: current tax revenues go to pay today's seniors. Excess monies are either spent or used to pay down the national debt, which means that not a single dollar is saved for future retirees. Every time someone pays payroll taxes, the government makes a new promise of future benefit payments, which wouldn't be an issue if that tax revenue was socked away somewhere. But it's not. Social Security has already amassed a staggering $9 trillion unfunded liability, and every day we wait to add personal accounts, we run up the tab further. Compounding the mess is something that eventually catches up with all pyramid schemes: the bottom layer disappears as new "investors" dry up, forcing the pyramid to invert, with more people taking out than putting in. When baby boomers retire en masse next decade, the worker-to-retiree ratio will plunge from its current 3.3 to one to just 2 to one by 2030. That means that every working couple will have to support one senior citizen. Since Social Security reform is a non-starter this time around, there will inevitably be another commission. The next panel should avoid the mistake of CSSS and not even discuss plans that incorporate benefit cuts. The fate of reform depends on it.

Joel Mowbray

Joel Mowbray, who got his start with Townhall.com, is an award-winning investigative journalist, nationally-syndicated columnist and author of Dangerous Diplomacy: How the State Department Threatens America's Security.

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