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 No Social Security 'Crisis'
 
    "THE CRISIS is now," President Bush says of Social Security. Both aspects of that declaration are incorrect; both also contain nuggets of truth. Social Security faces a long-term deficit that is significant, if not nearly as staggering as the accompanying shortfall in Medicare. Over the next 75 years, the projected shortfall is $3.7 trillion, although the president prefers to use an even scarier number, $10.5 trillion, the gap  forecast over an infinite horizon. Left untouched, the Social Security program, sometime in the next 40 or 50 years, is projected to run out of money to pay the full retirement benefits it has promised.
 
 This is less a crisis than a problem -- one that may be more easily solved on paper than in the real world, where politicians are loath to adopt changes that could keep the program solvent in the long run but inflict costs -- and therefore pose political risk -- in the short term. And though the problem isn't now, in the sense that Social Security is on the verge of going broke, it's also undeniable that it's far easier to fix things now than later. Failing to take sensible steps now will require harder changes later, in benefit cuts, tax increases or both.
 
 Social Security's fundamental difficulty is a demographic one: As time passes, there will be more retirees demanding benefits and fewer workers paying the taxes that fund the program. Currently there are more than three workers for every retiree; by 2040, that ratio will drop to  2 to 1. Moreover, increasing life expectancy will place additional demands on the program, a cost amplified by the fact that higher earners, who collect bigger Social Security checks, tend to live longer.
 
 The tipping point is now projected to come in 2018, when for the first time Social Security is  expected to pay out more in benefits than it will take in. It won't be until 2042, according to the Social Security trustees, or 2052, in the analysis of the Congressional Budget Office, that retirees' demands will be so great that the trust fund is depleted. At that point, enough new money will be coming in to pay 73 percent of promised benefits, according to the trustees (80 percent, according to the CBO). Even with such a reduction, future beneficiaries would receive more, in inflation-adjusted dollars, than they do today because of the way benefits are adjusted for wage growth. When Mr. Bush says that the system then "will be flat bust, bankrupt," he is flat wrong.
 
 What would have to be done to avoid cuts of this magnitude? According to the trustees, an immediate, permanent increase of the payroll tax by 1.89 percent of payroll (it's now 12.4 percent, including  the employer's and employee's contributions) -- or a benefit cut of 13 percent -- would let the program pay all the promised benefits for the next 75 years, though something more would have to be done after that. Economic growth that's healthier than projected could postpone the day of reckoning. So could more liberal immigration policies.
 
 Mr. Bush isn't the first to deploy the "c" word to describe Social Security's predicament. "This fiscal crisis in Social Security affects every generation," President Bill Clinton warned in 1998. Every year that changes are put off makes them more expensive -- and more painful to future generations. Whether private accounts would help is a topic we'll tackle in a future editorial. But a bit of hyperbole in the cause of generating responsible action on Social Security isn't the worst sin that is apt  to be committed in the course of the coming debate.
 
 This is one in a series of editorials examining Social Security and its future. Others can be found at www.washingtonpost.com/opinion. 
 
   

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