Another year of inaction has allowed Social Security’s problems to worsen. The program will begin running a deficit in just 11 years. In theory, the Social Security Trust Fund will pay benefits until 2040, a year earlier than predicted last year. That’s not much comfort to today’s 33-year-olds who will face an automatic 26 percent cut in benefits unless the program is reformed before they retire. But even that is misleading, because the Trust Fund contains no actual assets. The government bonds it holds are simply a form of IOU, a measure of how much money the government owes the system. It says nothing about where the government will get the money to pay back those IOUs.
Overall, the system’s unfunded liabilities — the amount it has promised more than it can actually pay — now total $15.3 trillion. That’s trillion with a T. Setting aside some technical changes in how future obligations are calculated, that’s $550 billion worse than last year. In other words, because Congress failed to act last year, our children and grandchildren were handed a bill for another $550 billion.
Once Social Security reform was a bipartisan issue. Democrats like former Senators Bob Kerrey and Daniel Patrick Moynihan were outspoken in warning about the program’s looming insolvency and calling for innovative approaches to fix it. The Democratic Leadership Council and its think tank arm, the Progressive Policy Institute explored ideas, including personal accounts. Congressmen like Charlie Stenholm reached across the aisle in search of compromise. Even President Clinton led a national debate to “Save Social Security First.”
But ever since President Bush called for reforming the nation’s troubled retirement program, congressional Democrats have had just one answer: No. No to personal accounts. No to changes in benefits. No to offering a reform plan of their own. No to any discussion or negotiation.
This wall of obstructionism, aided by millions of dollars in special interest advertising, successfully stalled efforts at reform last year. Now, Democrats refuse even to join a bipartisan commission to look at the options for reform. Even talking about Social Security reform is too much for today’s Democratic Party.
And, while Democrats have been obstructionist, Republicans have hardly earned a badge of courage on the issue. Too many of them ducked and weaved and did almost anything to avoid having to make tough choices. The House leadership in particular was as effective as Democrats in blocking debate. Who cares about the debt we leave to our children and our grandchildren, they seem to say, as long we make it through another election cycle without having to stand up to AARP.
But Social Security’s problems are not going to go away. The gap between its promises and what it can pay gets bigger with each passing year. The rate of return for younger workers continues to decline. And, even more important, workers still have no ownership of their money.
Almost everyone agrees that Social Security reform is not going to happen this year. This is an election year after all. But an election year also means that the people can have their say. No candidate, whether Republican or Democrat, should be able to avoid telling us exactly where they stand on Social Security. Do they favor raising taxes? Do the want to cut benefits? Are they willing to give workers more choice, ownership and control over their retirement funds?
Obstructionism has a cost. And that price tag keeps rising.