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Is Social Security Going Down the Drain?

President Bush has told us that the Social Security System is in imminent danger, and that the way to fix it is to divert some of the money flowing into the system into private accounts. For all of the President's flow charts, the answer he has plumbed from this "crisis" is clogged with faulty reasoning.

Perform this experiment: go into your bathroom, close the drain to the sink partway, and turn on the tap so that the amount of water flowing into the sink is the same as the amount flowing out. This is the original Social Security system. The system works as long as the amount of water going into the sink is greater than or equal to the amount of water coming out.

Remember the water you put in is not yours, and is being drunk by other people who are already retired. When you retire, you can drink from the same system, provided other people continue to pour in their water every day. There never was an expectation that you would get out of the system what you put in. That depends entirely on how long you live. Some people die early and never get any out, while others live long and take out more than they put in. The system works on averages.

Social Security can be treated the same way. It's there for people who need it, and people who don't should be happy that they don't.

Now open the tap a bit more, and wait a year. The sink gradually fills. This is the Social Security system we have now. The reason for rising water levels is the amount of water flowing in was larger than the amount flowing out, due to the baby boom.

But the baby boomers are about to retire. What effect will this have on the system? Let's find out!

Baby boomers retiring means that the work force will get smaller, so there will be less water pouring into the sink. Also, more retirees means that there will be more water flowing out. Open the drain a bit. What will happen? Obviously, the water level will go down, and if nothing changes, it will eventually disappear.

There will still be water going into the drain, but not as much as the drain can handle. This is the looming crisis. Estimates place it at about the year 2042.

President Bush wants to solve this crisis by allowing workers to use some of their Social Security tax to open private accounts. Of the money they currently put into the Social Security system, some of it will not go in, but will be shunted off to the side. How will this affect your sink?

The sink will empty even faster than before, and the impending crisis will arrive much sooner than 2042. The President insists that the Social Security tax will not go up and the benefits will not go down. So he is saying, with the water level going down, he will neither open the tap nor close the drain, but don't worry, we'll be OK. Do you believe him? Neither do I.

Isn't there a better way? Of course there is. If less water is flowing in, the obvious idea is to tighten the drain a little. Bush has just passed a tax cut that goes disproportionately to the rich. They don't need it, but they got it anyway-now they are even richer. It seems to me that rich people do not need their Social Security benefits (and most of them won't even notice the difference). There is another category of pretty rich people who don't need all of it.

How about we keep Social Security benefits at current (or even, perhaps, higher) levels for people for whom this is an important source of retirement income, and let them gradually taper off as you get to richer and richer people. By tuning the cut-off levels, it should be possible to ensure both that no one goes wanting and that the system remains solvent.

Won't people object to this because some will pay into the system and get nothing out? Not if we think of Social Security as insurance, which is, in fact, what it is. You pay insurance on your car every year. Are you upset when you don't get in a crash and therefore don't get back your "investment"? Social Security can be treated the same way. It's there for people who need it, and people who don't should be happy that they don't.

David Reingold is a professor of chemistry at Juniata College.