Don't bet on some grand compromise between President Bush and Congress to reform Social Security. There's been plenty of conjecture of late that Bush might agree to a plan that would raise the payroll-tax income limits as one way of returning the social insurance program to long-term solvency. Any reform plan would have to make its way through the Senate Finance Committee, which will be chaired in the new Congress by Montana Democrat Max Baucus. He's a guy the White House thought at one point might be a vote in favor of Bush's plan to carve out personal savings accounts as a way to make Social Security a better deal for younger workers.
But I have to say that a brief chat I had late yesterday afternoon with Baucus didn't imbue me with much confidence. I asked him flat out if there would be major Social Security reform in this new Congress. Baucus slowly and rather unenthusiastically replied, "Oh, I don't know. The trust fund doesn't reach zero until 2042." His choice to focus on the year 2042 is telling. Proponents of the go-slow approach to reform usually concentrate on that yearwhen the IOU-filled trust fund is predicted to be exhausted and benefits will have to paid out of current revenue, resulting in a 25 percent cut. But those in Washington who want something done right now focus instead on the year 2018, the first year when benefits will exceed tax revenue coming in. That's when the trust fundnow used to bankroll current spending, masking the true size of the federal budget deficitwill need to be tapped to fully pay benefits.
Given the obvious political difficulties of fixing Social Security (the "third rail of politics" and all that), just try getting anything done if it's being framed as an issue that doesn't become a crisis for another 35 years.