Slouching toward bankruptcy: the longer Washington puts off Social Security reform, the worse the shock will be.

• Author: de Rugy, Veronique
• Position: Columns - Column

IN NOVEMBER 2004, President George W. Bush was re-elected after campaigning on personal accounts for Social Security. It was unfair, he argued at the time, to make a generation of young people pay into a system that's going broke. Bush's plan promised to make the program solvent, allow younger workers the option to earn a better return by investing part of their Social Security taxes in personal retirement accounts, while maintaining the status quo for current retirees.

Republicans held substantial majorities in both houses of Congress, including 55 senators. Yet there would be no Social Security reform.

Opinions vary about why that was. Writing in Forbes in 2011, Peter Ferrara, one of the strongest advocates for Social Security privatization, argued that the proposal failed because "Bush's White House staff in charge of the Social Security reform effort never understood the politics or policy of personal accounts, and proved ineducable on the subject." On the other side of the issue, William Galston, a senior fellow at the Brookings Institution, argued in 2007 that "President Bush overestimated the amount of political capital he had banked."

In his memoir Decision Points, Bush blames the failure on the "rigid Democratic opposition" and the lack of "strong Republican backing to get a Social Security bill through Congress." He also recognizes that he bears some responsibility himself. Bush suggests, for instance, that he might have made some progress with centrist Democrats had he not personally campaigned against Democratic incumbents in 2002 and 2004. He also thinks that if in 2005 he had started with immigration reform rather than Social Security, he could have passed both and the country would be a better place for it.

Since the Bush debacle, Republicans have not had the courage to rally behind a plan to reform Social Security. But while the political will may not exist, the 77-year-old system remains in serious need of a makeover.

By the end of the 1970s, the pay-as-you-go program--in which current workers pay for current retirees--was already headed toward bankruptcy. Then it was rescued in the 1980s when President Ronald Reagan hiked the payroll taxes that fund it and increased the age at which benefits would kick in for people currently paying into the system. He left the benefits of current retirees untouched.

As a result of those changes, Social Security has not just survived; it surpassed the Pentagon in 1993 to become the single...