After a long Christmas break during which they had to spend their own money, Congress returned to Washington this week and prepared to start spending more of ours.
The Bush administration appears ready, even eager, to take on what will be the biggest domestic challenge of the last 50 years — reforming Social Security (search). It won't be easy.
That's not because anyone doubts what must be done. Rather, it is because some politicians want to use Social Security as a political football. They know the present system cannot possibly guarantee retirement benefits to the next generation that are equal to current benefits.
The primary reason Congress must fix Social Security now is because of the wage-indexing imposed by the Carter administration. Under wage-indexing (search), Social Security grows much faster than it does when benefits are adjusted only for inflation. Wage-indexing makes it impossible to grow our way out of the Social Security deficit.
Congress has raised the Social Security tax 30 times since 1937, when the tax was just 2 percent. The tax is now 12.4 percent. Personal retirement accounts will produce compound interest, which will pay future retirees higher benefits than they currently receive. But the system requires a top-to-bottom restructuring.
Social Security was launched before television and while records were still played on a Victrola. Virtually everything else has been modernized. Liberals would keep Social Security back in the Victrola days rather than updating it because they fear more people would become independent of government and no longer need them. That is really what this issue is about.
If President Bush and the Congress do what must be done, Social Security reform will be the crowning domestic achievement of this administration, with benefits lasting longer than we do.
And that's Column One for this week.
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