President George W. Bush will revive the national debate over the future of Social Security next year, no matter what happens in the November elections. Even if the Democrats capture control of one or both houses of Congress, the president will once again promote his voluntary plan for personal investment accounts under which workers would be permitted to divert part of their Social Security taxes into stocks and bonds.
He failed to make the case to the nation in 2005 on this issue, but regards it as one of the most important pieces of unfinished business for his presidency. "Now is the time for the Congress and the president to work together to reform Medicare and reform Social security so we can leave behind a solvent balance sheet for our next generation of Americans," he said during a speech earlier this year. "If we can't get it done this year, I'm going to try next year. And if we can't get it done next year, I'm going to try the year after that, because it is the right thing to do."
The president and a majority of congressional Republicans generally say they believe Social Security and Medicare are worthy programs but are unaffordable in their current form. Republicans say revamped Social Security and Medicare programs would offer more options for citizens in decision making for their retirement and healthcare.
Democrats regard Social Security and Medicare as the core of their party's belief system, demonstrating daily that government can do good things for Americans. They want the programs preserved without significant alterations, although they would like to rewrite the Medicare prescription-drug law to give the government power to use its negotiating muscle with pharmaceutical manufacturers. Now the negotiating is done by insurance plans and HMOs. The president would never accept this change. Each side in the political wars will claim the election results validate their philosophy for dealing with Social Security and Medicare.
Social Security faces a cash flow squeeze in 2017, the first year in which benefits paid will exceed payroll taxes flowing into the system. Bringing in surplus money, Social Security now eases the massive federal budget deficit After 2017, the Social Security trust fund will begin liquidating the special bonds it has received in return for the surpluses it has been contributing to the U.S. Treasury since 1983. The bonds will be redeemed by 2041. Then Social Security would be able to pay only 73% of the benefits promised under current law.
CHOICES NOT SO SIMPLE
The choices are simple in concept if difficult in execution: Generate more money to fill that 27% gap needed to pay promised benefits, or reduce the size of the gap by spending less on benefits. In 2005, President Bush called for the creation of private accounts to make money available in retirement and proposed a major change in the benefit formula that would have reduced …