Full disclosure

February 04, 2005

ONE OF THE MORE interesting moments in President Bush's State of the Union address was when opponents of private Social Security accounts burst into derisive hooting that sounded more like it came from the British Parliament than the floor of the U.S. House. The reaction, however unusual, was warranted on the facts.

In his speech, the president pitched fundamentally altering Social Security by calling for "an open, candid review of the options." In that vein, we're glad the White House this week finally began admitting that moving to private accounts alone wouldn't do anything to dent Social Security's funding gap. But overall, Mr. Bush's speech was less than candid.

Take his assertion that triggered the opposition growls: Social Security will be "exhausted" in 2042.

It will not.

The latest projections say sometime as early as 2042 - or as late as 2052 - Social Security will pass the point of being able to pay 100 percent of currently scheduled benefits. But it won't be exhausted. The system could then pay a projected 73 percent of scheduled benefits till at least 2075, the point at which current estimates end.

The administration also isn't coming clean with its new claim that the cost of transitioning to private accounts - money that would have to be borrowed in the near future - would only be about $750 billion.

Much like the one-eyed accounting the Bush White House has used to obscure the size of the unsustainable long-term budget deficits from its record tax cuts, you can only arrive at $750 billion by looking forward just a decade from now, a decade in which private accounts would be phased in during just the last five years.

What selective logic. On one hand, Mr. Bush warned the nation that 2018 - the year that Social Security stops taking in more than it pays out - is just around the corner, and on the other, he painted a much rosier picture of the costs of private accounts by tallying them only until 2015.

Carry the accounting of his plan through its first decade to 2018 and cumulative costs exceed $1 trillion, according to the Center on Budget and Policy Priorities. Carry it out through its first two decades to 2028 and total costs exceed $4.5 trillion - all new debt.

More fundamentally, the president also displays selective candor in arguing for an urgent Social Security crisis. The system, indeed, has a long-term fiscal gap. But the real and present fiscal danger comes not from Social Security but from spiraling Medicare costs and Mr. Bush's tax cuts.

The long-term cost of the president's tax cuts, if made permanent, is three times that of fixing Social Security. The combined underfunding of Social Security and the Medicare Hospital Insurance Program over the next 75 years could be almost covered by not making Mr. Bush's tax cuts permanent.

So let's lay out all the options for Social Security, as Mr. Bush suggested Wednesday. But the nation deserves a full disclosure of the facts - not just a sales pitch.

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