A new study by the Center for Budget and Policy Priorities in Washington ought to put to rest any doubt about the Bush Administration's plan to dramatically alter Social Security by introducing private investment accounts. The message that comes through plainly for Congress is: don't do it.
Two economists from MIT and the Brookings Institution studied a technical analysis of the Bush plan prepared by the actuaries at the Social Security Administration. They turned up what they call a “magic asterisk” involving a fatal assumption on the part of the commission that drafted the plan.
The assumption is that trillions of dollars would be transferred from who-knows-where-else in the federal budget to keep Social Security solvent while subsidizing the private retirement accounts.
The bottom line: The Bush plan would “substantially reduce benefits” for future retirees. And the losers would be not just those who elected the private accounts, but all retirees under the federal system, plus disabled people who collect payments under the Social Security Disability program.
The cuts calculated by the economists vary according to three possibilities presented by the actuaries. They would range from as little as about 5 percent for a person now 45 and expecting to retire at 65 up to 41 percent for a person born this year.
And that's assuming - a dangerous leap of faith - that a future Congress would have the incredible political will to shift anywhere from $2.2 trillion (with a T) to $3.1 trillion from other parts of the budget. Without those magical transfers, who knows how large the cuts would be.
Of course, the cuts wouldn't take place until the Bush presidency is long-gone. Politics is a short-term vocation these days, but a legacy lives forever. Does Mr. Bush want to be known as the president who crippled what has been the best and most reliable federal program in history?