The Washington Post

December 13, 2001, Thursday, Final Edition

SECTION: EDITORIAL; Pg. A36

Money From Where?

THE GOAL of the president's commission to strengthen Social Security was never to assess the full range of choices Congress will face in shoring up the system but to tout a particular choice. That limited the usefulness of its work, now largely completed. The commission's report is worth reading, raises some interesting issues, sheds light on how Social Security does and doesn't work and may in some ways help advance the debate. But in the end, in our view, the commission blurs the equation in precisely the same way it rightly denounces so many of its critics for doing: It skips too quickly past questions of cost. The commission would divert a share of Social Security revenue to help younger workers who chose to do so begin to set up personal investment and retirement accounts as a supplement or partial alternative -- take your pick -- to traditional Social Security. It would be wonderful if more people -- all people -- had such savings accounts. The savers would plainly be better off; so, by virtue of the increased savings, would the economy. And the proceeds would help offset the benefit cuts that surely lie ahead if Social Security is to be put on a sound financial footing. But to finance those accounts by reducing the funds available to pay for traditional Social Security benefits when those funds already are insufficient is to compound the problem the transfer is meant to resolve. Even larger benefit cuts or revenue increases become necessary to make the traditional program whole.

The commission acknowledged that there would be a need for additional revenue at least in the short run no matter how sharply benefits were cut. Its instructions from the president were not to call for an increase in the payroll tax. It therefore called for general revenue infusions. But there isn't any surplus general revenue around anymore; the president's tax cut, the recession and the costs of combating terrorism have seen to that. So what is the commission proposing? Some other kind of tax increase? It doesn't say.

To the contrary, it says the costs of filling up the new accounts shouldn't even count as costs, since they're really "investments" in the system's long-term future. You wonder what other government spending ought not count as a cost. The annual investments in roads? In education? In national defense?

If a tax is part of the price of these accounts, it ought to be subtracted in calculating the benefit of the accounts. That's precisely the kind of reasoning on which the commission rightly insists in judging the present system; don't talk about the benefits promised in current law without also talking about the higher taxes needed to pay for them. It's fair in the one case; why not in the other?

The commission would increase the guaranteed benefits of various groups -- lower-paid workers, widows - - for whom it says the current system provides too little support. That seems right to us. It goes on to say that private accounts would be of particular benefit to the poor and to blacks and members of other minority groups with shorter average life spans than the population as a whole. They'd have wealth to bequeath to descendants, whereas now they often die so early they collect no benefits. But in fact most would not have wealth to bequeath because they'd be forced on retirement to convert their accounts to annuities -- and some survivors of those who die early are even now eligible for survivors' benefits. The commission also reduced the seeming cost of its proposal by assuming that disability as well as retirement benefits would be significantly cut, but the president promised not to do this. Without the disability cut, a considerably larger revenue infusion would be required.

Private accounts may well be a good idea, but they are far from a silver bullet, as this report itself makes clear. They bring their own problems, and our sense continues to be that they should not be created at traditional Social Security's expense. The program is burdened enough as it is.