President Bush began 2005 by telling Americans about a fiscal storm heading their direction and the weak levee in place to deal with it. The storm was the retirement of the baby boom generation, and the levee it threatened to take out was the nation's Social Security system
"Thirteen years from now, in 2018, Social Security will be paying out more than it takes in," he said in his Feb. 2 State of the Union address. "And every year afterward will bring a new shortfall, bigger than the year before." By mid-century, he predicted, Social Security "would be exhausted and bankrupt."
His response to this crisis was to make Social Security reform the centerpiece of his second-term domestic agenda. Personal accounts were at the heart of his plan: Younger workers who accepted lower guaranteed benefits would have the option of investing one-third of their payroll taxes in a conservative mix of stocks and bonds. Assuming the stock market would perform as well in the future as it has in the past (an assumption some analysts challenged), young workers would have more money for retirement than the current system would give them.
This task-to change fundamentally the most popular government program in U.S. history-was daunting from the outset. At one point during the State of the Union address, Democrats shouted out "no!" as President Bush made the case for reform, and that remained their united cry throughout the year. Investing in stocks and bonds, they argued, was no different than rolling the dice at a casino. Reform should not "mean taking Social Security's guarantee and gambling with it," said Senate Minority Leader Harry Reid (D-Nev.). "And that's coming from a senator who represents Las Vegas."
Some Republicans in Congress also balked, citing concerns over the cost of a transition to the Bush plan-estimated by Vice President Dick Cheney to be more than $700 billion over the first 10 years and "trillions more after that." A strong instinct for political survival made other Republicans nervous about reform, a feeling crystallized by Rep. Rob Simmons (R-Conn.) during an interview with The Washington Post: "When does the program go belly up? 2042. I will be dead by then."
Despite a big initial push from President Bush, the issue receded from public view as other events-elections and terrorism in Iraq, Abu Ghraib convictions, Hurricane Katrina, a spike in gasoline prices-took center stage. As the president's approval ratings fell, popular support for personal accounts waned as well. Without the political cover of at least some Democratic support, Republicans were unwilling to touch the so-called "third rail" of American politics.
Nearly everyone in Washington agrees that Social Security reform is dead-at least for now. "I can't even get consensus among Republicans," said Senate Finance Committee chairman Charles Grassley (R-Iowa), who predicts that the issue won't come up again until the 2008 presidential campaign.
In the meantime, however, the storm continues to brew, and the levee grows weaker by the year.