Social Security Reform: Will We Get There?

• Author: Hinchman, Grace
• Position: Brief Article

President George W. Bush faces the awesome task of developing public policies that will keep the economy stable and appease policymakers, while reforming outmoded government programs such as Social Security. With less than a clear mandate, President Bush inherits a country divided over whether he should abide by his campaign promises to privatize part of the Social Security program or seek compromise with Congressional Democrats on other policy programs such as tax reform, education and increased defense spending.

With such a dubious mandate, it would appear that Bush has little chance to affect policy during his tenure. Or does he? Right now, the President's Social Security reform initiative is still on the drawing board, and it will be up to him to gain bipartisan consensus on an approach to reform the program.

Today's Social Security program is financed on a pay-as-you-go basis -- meaning that benefits are paid out of current tax revenues. If income exceeds the program's costs, the surplus is held in a government trust fund. What policymakers recognize is that the program's benefits will soon exceed its income. The retirement of the baby boom generation, starting in 2008, coupled with a shrinking taxpayer base, will quickly drain the program's assets and, according to current projections, cause it to go bankrupt around 2037.

Bush made Social Security reform a priority of his campaign. He maintained that if Congress is serious about overhauling the current plan -- without reducing benefits or increasing taxes -- then Congress would have to privatize the program. A number of studies indicate that the President's proposal has popular appeal. Recently, a survey conducted by a pollster for former President Clinton showed that a majority of Democrats agreed with Bush's stance on Social Security privatization.

Improving Prospects

Despite growing support for such a privatization initiative, however, conventional wisdom suggests that Social Security reform will not come to pass anytime soon, especially...