Crisis proportions

In his State of the Union speech, President Bush was like the lookout man on the Titanic who yelled, "Iceberg, right ahead!" Unless Washington acts soon, he said, Social Security will begin sinking in 2018.

In their responses, Democratic leaders have sounded more like the Titanic's owners, who insisted that the massive steamer was unsinkable. Social Security will stay afloat for at least another four decades, they said, and probably even longer.

Who is correct, then? President Bush chose 2018 because that is when Social Security will begin to pay out more than it takes in. The projected annual shortfall will grow each year and top $300 billion by 2033.

This looks very much like a crisis, but Democrats say it's not one because when the shortfalls occur, Social Security can begin drawing on its trust fund to keep the system working until at least 2042 and perhaps even 2052.

The issue turns, then, on the soundness of Social Security's trust fund. For the past two decades, workers have paid more into Social Security than the program spends, with the surplus going into a trust fund. Except that it didn't. Instead, Congress "borrowed" the $1.5 trillion in surplus money, spent it on other things, and put government bonds in the trust fund.

What Democrats don't say is that in 2018, when the trust fund needs to start cashing in those bonds, the Treasury won't have the money. Someone will have to pay up, and if you want to know who, look in the mirror. Or better yet, if you have an infant son or daughter, look into the crib.

With a (much) bigger Medicare bill also coming due, the government will have to raise taxes substantially or take on debt (or, less likely, cut other spending). Democratic leaders don't see this as a crisis because they don't see taxes that escalate yearly as a negative. GOP leaders do, warning that higher taxes could harm the economy.

This difference is the reason that President Bush is trying to steer Social Security around the 2018 iceberg-while Democratic leaders merely want to rearrange deck chairs on the ship.