Social Security Battle Looks More Like a Ballet

The political fistfight over Social Security reform suddenly looks more like a carefully choreographed ballet.

Republicans and Democrats are eager to make it their own campaign issue -- so they're concentrating on their footwork to avoid embarrassing missteps. But in so doing, both parties have neglected to address any specifics in this year's midterm election.

"The quality of debate today leaves much to be desired," said Henry Aaron, senior fellow at the Brookings Institution, a moderate think tank in Washington, D.C.

Democrats say they won't touch Social Security, while Republicans generally advocate carving out part of the Social Security trust fund and allocating it to private accounts. Such a plan would allow individuals to invest in the public markets. Republicans say they'll do this without raising taxes, cutting benefits or expanding the deficit.

"Since that's not possible, both sides are basically promising to do nothing," said Harry Zeeve, national field director of the Concord Coalition, a nonpartisan group focused on fiscal responsibility of social programs. "And that's a big problem."

Think tanks agree that an issue as thorny as how to reform the country's retirement program needs bipartisan support. Even if Republicans sweep the House and Senate in the midterm election, they'll still need to find enough support among both parties to pass any initiative.

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"Social Security is not a candidate for one-party reform," said Eugene Steuerle, senior fellow at the Urban Institute, a nonprofit, nonpartisan policy-research organization. In other words, no matter what the outcome of the midterm election, Social Security reform won't occur anytime soon.

Downward Spiral

The problem with Social Security lies in the fact it's a "pay-as-you-go" system -- essentially, the money it collects from people's paychecks today gets paid out immediately to current retirees. Right now, the Social Security fund is running a $159 billion surplus. The government has been using that surplus to fund other governmental operations, giving the Social Security trust fund some $1 trillion in Treasury bonds in exchange (politicians like to call these "IOUs"). But the system will be pinched in a few years, when the Baby Boomers begin to retire.

In 2017, the program will stop taking in more than it pays out. That's when the program will have to begin cashing in bonds -- and the government will have to make good on them. If the system isn't fixed, by 2041 the Social Security trust fund will be running a deficit.