Should Republicans go ahead and add Supreme Court Justices to head off Democrats

Dems in denial

Steve Rattner:

In his 1998 State of the Union address, President Bill Clinton waved his pen at the assembled Congress and declared that we must "save Social Security first." Democrats have since generally clung to that vision.

But now, in an ill-conceived effort to derail President Bush's privatization initiative, many prominent Democrats are suddenly dismissing the notion of a Social Security crisis or even a Social Security problem. Instead of offering sensible alternatives to the president's flawed proposals, Democrats are devoting their energies to attacking both the president's ideas and any notion of altering the Social Security construct.

We can debate endlessly what constitutes a "crisis" but not that Social Security faces a major financial challenge. According to actuarial estimates by the system's trustees, Social Security costs will begin to exceed revenue beginning in 2018 -- not so far off.

That would have been less daunting had we saved the very substantial Social Security surpluses of the past two decades. Instead, we mostly spent them, particularly in the past four years, leaving behind a much-touted Social Security trust fund that is, in reality, a myth.

All that resides in the trust fund is a $1.5 trillion pile of IOUs from the federal government, obligations likely to be honored by increasing the national debt. In addition, according to the trustees, we would have to deposit an additional $3.7 trillion into the trust fund today to ensure solvency until 2078. Is that a crisis or just a problem?

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Let's not forget that virtually every state and local pension plan -- as well as plans for Federal Reserve agencies and other government entities -- is invested in assets that Democrats brand as risky. For Social Security, we could limit investments to broad market indices rather than individual stocks or bonds, thereby providing greater safety and eliminating political complications.

I do not agree that the President's proposal is flawed, but it is hard to argue that the Democrat's "proposalP is anything but flawed. The real difference between the President's proposal and Rattners is who would own the investments. Rattner wants the govenment to own them and Bush wants the people who put the money in to own them.