"News analysis" -- White House selling snake oil

Wow. The Times' Edmund Andrews actually looks under the Social Security privatizaion rug the White House has laid, to uncover the open trap door underneath.

"The creation of private accounts for Social Security will not deal with the solvency and sustainability of the Social Security fund," that official, David M. Walker, comptroller general of the Government Accountability Office, said in a speech on Monday.

Or, as Thomas Saving, a Republican-appointed trustee to the Social Security trust fund put it last week: "Fundamentally, if you don't reduce the benefits, you don't reduce the debt."

Some of the Republican proposals would raise the age when people can start to receive benefits. Others would reduce payments to beneficiaries to account for longer life expectancies. Still others would reduce payments to married couples and scale back the annual increases that are made to keep pace with inflation.

But the biggest single idea is included in the plan the White House most often points to, abandoning the practice of setting benefits as a share of people's pre-retirement earnings.

Analysts affiliated with both political parties say that that one change could save more than $10 trillion over the next 75 years, more than enough to wipe out Social Security's projected shortfall. People retiring today or even in the next 10 years would feel almost no impact.

But in decades to come, analysts say, many people would see sharper drops in their incomes when they retired. And because benefits would not keep up with wages, many retirees could feel steadily poorer compared with neighbors who still work.

Mr. Bush, who is likely to step up his call for private accounts when he acts as host of a two-day conference on the economy this week, has steadfastly avoided any reference to cutting future benefits. Instead, he has repeated a two-part message, that Social Security faces a financial crisis, and that people should be allowed to put some of their payroll taxes into private accounts and earn higher returns by investing in stocks.

And while there are still some members of the Republican Congress that belong to the Reality-based Community, like Lindsay Graham, others are proposing ways to privatize, end the deficit, and guarantee Viagra for all male retirees, all in one fell swoop.

Democratic lawmakers say the problems in Social Security can be fixed with modest changes that would be phased in slowly. Lifting the ceiling on payroll taxes, which are capped when a person earns more than $87,900, would fill much of the gap. Pushing back the normal retirement age, which is already set to shift from 65 to 67, would reduce the deficit even more.

"If the president pulled all sides into a room and put everything on the table, we could solve this problem very quickly," said Representative Robert T. Matsui, Democrat of California.

Mr. Bush's own advisory commission in 2001 made it clear that personal accounts would make little dent in the underlying shortfall.

If the government kept Social Security benefits as they are now, and let people set up private accounts as well, the government would still face a shortfall of more than $4 trillion over the next 75 years.

Some Republicans suggest that a free lunch may indeed be possible. Representative Paul D. Ryan of Wisconsin and Senator John E. Sununu of New Hampshire have proposed a bill they say would eliminate the projected shortfall without reducing future benefits or imposing new taxes.

In contrast to most other proposals, which would not allow people to divert more than about $1,000 in taxes a year to personal accounts, Mr. Sununu and Mr. Ryan would let people divert almost all their Social Security taxes to private accounts.

"What we learned was that with these large accounts you produce such large surpluses that you don't need to cut back on benefits," Mr. Ryan said.

But many analysts are skeptical. The key to the plan is a premise that total government spending on all programs would grow by 3.6 percent a year for the next eight years.

That would be extremely difficult. More than two-thirds of the federal budget is locked up in mandatory entitlement programs, mainly Social Security and Medicare. Any cuts there would violate Mr. Bush's pledge to protect people who are at or near retirement.

An additional 20 percent of the budget goes to domestic security and the military, which have ballooned under Mr. Bush, and with no end in sight to the war in Iraq, are expected to keep climbing.

This is a hopeful sign. Perhaps the New York Times is fulfilling its duty to do more than act as scribes at White House press gaggles. However, I think they could be more forceful than saying things like "analysists are skeptical." Truth is, the Sununu plan would be the end of Social Security. That's not something Republicans want to say, but that's their plan.