February 10, 2005, 7:01 a.m.
Early Returns

The campaign for Social Security reform has now begun in earnest. The president devoted much of his State of the Union address to making the case for the idea. He argued that the program's commitments have to be brought into line with what it can afford, and that young workers deserve a better deal. We would have preferred a little more emphasis on that last point, but Bush seems to have made some progress in winning public support for reform.

The press is not making his job any easier. The Washington Post ran a misleading story about the president's idea for personal investment accounts, and had to issue a half-correction; Paul Krugman then repeated the original misstatements. Under Bush's proposal, workers will have a choice about whether to open a personal account. If they open one, they will be choosing to rely more on those accounts, and less on government checks, for their retirements than the people who choose to stay in the regular system. In return for the opportunity to build a nest egg in the account, in other words, workers would have to accept smaller checks from the government. People who choose the accounts will come out ahead if their investments get a return that averages above 3 percent a year. From this fact, the Post somehow concluded that Bush was going to let workers get only the returns above 3 percent, while the government would take everything up to 3 percent. That would make the proposal a very bad deal for workers. But it's not true.

Not all the confusion about the president's plan is the result of incompetent reporting. On Fox News, Vice President Dick Cheney said that the plan involved trillions of dollars in "transition costs." Viewers who are not experts on Social Security — almost all viewers, in other words — were left with the incorrect impression that Bush's reform raises costs. Cheney never explained that the "transition costs" are just a matter of paying for some of Social Security's obligations now rather than later. If the principal players in the administration are not going to shoot down bogus arguments against reform, who will?

Meanwhile, some reformers seem intent on shooting down potentially productive compromises. Jim McCrery, a Republican representative from Louisiana, suggested that while Democrats resist letting workers invest their payroll taxes, perhaps they would support letting workers invest their income taxes. That idea needs some refinement. And a reasonable case could be made that it is premature for McCrery to be talking about compromises at all at the very start of this debate. But his idea does not deserve to be dismissed out of hand, as the Wall Street Journal's editorialists did. It is possible to see it forming the basis for a compromise that advances conservative goals (such as expanding the new investor class). Getting a good plan through Congress is going to be difficult enough for Bush without his allies' making it harder.

EDITOR'S NOTE: This editorial appears in the February 28, 2005, issue of National Review.

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