What's Next for Social Security?

It was just over one year ago that President Bush, fresh from his re-election victory, announced that substituting private accounts for a part of Social Security's guarantee would be a top priority of his second term. In so stating, President Bush broke ranks with every former president, Republican and Democratic alike. All had understood the value and importance of Social Security.

Even President Bush's own father said in his 1990 State of the Union address, "To every American out there on Social Security, to every American supporting that system today, and to everyone counting on it when they retire, we made a promise to you, and we are going to keep it the last thing we need to do is mess around with Social Security."

The current president spent much of 2005 warning that "the crisis is now" for Social Security. His headline-grabbing, alarmist rhetoric stirred up a great deal of anxiety but no concrete action. President Bush's Social Security proposal appears dead, at least for now.

But the president has made clear that he is not giving up.

As recently as Tuesday, Jan. 23, President Bush said, "Last year I talked about doing something about [Social Security], and the Congress didn't do anything about it. So this year I'm going to talk about doing something about it, and the next year something about it, and the next year something about it."

Moreover, Social Security does have a projected long-range deficit which has not yet been addressed. What will happen next? What should happen?

President Bush has argued that Social Security is a Depression-era program that is out of date, fundamentally flawed and in need of modernization. The truth is that Social Security was enacted during the Depression, but it was not made for the Depression.

In order to give workers time to become insured, the Social Security Act of 1935, which created the program, provided that monthly benefits would not begin for seven years after the 1935 enactment -- until Jan. 1, 1942, a date more than 12 years after the stock market crash of 1929.

President Roosevelt recognized that to get immediate assistance to people in need -- to alleviate the immediate suffering caused by the Depression -- there was no alternative to means tested welfare, and so Congress enacted that as well. But for the long term -- once the Depression was history and the economic health of the country was restored -- the president wanted a system of insurance in place to guarantee for posterity that every American would have a reliable, stable source of income to replace wages once workers became too old to continue to work. (It has since been expanded to replace wages lost as a result of death or disability.) The idea was to keep middle-income workers from falling into poverty once wages were no longer there.

President Roosevelt's vision is as relevant and important today as it was then: As long as people are dependent on wages, Social Security is necessary. As Sept. 11 so starkly demonstrated, tragedy can hit anyone at any time. Today, the 9/11 families receive monthly Social Security benefits, which replace the wages of their loved ones who perished. Social Security is in place so that American workers and their families for all time will have a reliable, stable source of income to replace wages in the event of death or disability.

Moreover, in a world where the private pension system is in trouble, where major companies like IBM are freezing or terminating their plans and where savings are at their lowest rate since the 1930's, Social Security's rock-solid guarantee of a floor of protection in retirement is more necessary than ever. What about the claim that Social Security is unsustainable, as President Bush has argued? President Bush claims, every time he talks about the subject, that Social Security is a victim of the aging baby boom, reflected in the ratio of workers to retirees, which used to be 16 to 1, is now 3 to 1, and in 2030, will be 2 to 1.