"He wants to take away your Social Security." John Kerry hasn't uttered these words about President Bush yet -- but he will as his campaign inevitably sinks to the lowest common denominator of Democratic demagoguery.
Bush has made himself more vulnerable to the charge than the average Republican by endorsing Social Security reform in his acceptance speech at the GOP convention. Bush thus demonstrated his willingness to confront the Democratic equivalent of the Brezhnev Doctrine when it comes to entitlements -- once established, entitlements never recede, but only grow larger. Bush dares to imagine something other than a 70-year-old New Deal model for dealing with retirement. If he can create a mandate for something new, his second term could be as consequential domestically as his first term was abroad.
The current Social Security system is on its way to becoming the WorldCom of entitlements. The Social Security Trustees estimate the program will begin running a deficit in 2018. The red ink will amount to $16 billion that year and will climb every subsequent year. Cato Institute analyst Michael Tanner estimates the program's shortfall from 2018 going forward at $26 trillion. Washington, we have a problem. Within the constraints of the status quo, there are only two solutions: cut benefits (which Kerry, of course, rules out) or hike taxes (which everyone rules out, right up until the point the taxes are hiked).
On top of this looming bankruptcy, Social Security is becoming an ever-worse deal for workers. In 1950, there were 16 workers per beneficiary. Now there are three. The rate of return for workers is steadily dwindling. According to the conservative Heritage Foundation, a married family with one earner born in 1932 and two children gets 4.74 percent back on its retirement taxes. The same family with the earner born in 1976 gets less than 2.6 percent, and the return gets smaller for younger families. Even very conservative investments in bonds and stocks would yield returns substantially higher.