Our senators at forefront of Social Security reform

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In the recent elections, South Carolinians signaled their support for Social Security reform by giving a decisive victory to Jim DeMint over Democratic challenger Inez Tenenbaum. In his campaign, DeMint pledged to push for reform while Tenenbaum opposed the partial privatization of Social Security.

President Bush, with a Republican-controlled Congress, now may have a small window of opportunity to accomplish what no other president has been able to do — substantially change the way Social Security works. The private accounts proposed by Bush and Republicans would work much like the 401(k) retirement accounts that millions of workers already have.

As Graham and DeMint push for reform, however, South Carolinians expect their senators to be upfront about the enormous costs associated with proposed legislation. Under the current system, the payroll tax paid by workers goes directly to retirees. Allowing current workers to put 2 percentage points or more of their payroll taxes into a private retirement account would mean that billions of dollars would not be available for retirees. The shortfall would have to be made up somehow to preserve benefits for current retirees. An analysis put the price tag of one reform plan at $104.5 billion just in 2005, and rising sharply after that.

Republicans appear to favor borrowing money to finance the transition to private accounts, although large-scale borrowing will be virtually impossible if Bush abides by his pledge to reduce the federal budget deficit. Some lawmakers say benefit reductions for seniors and tax increases must also be part of the equation.

Private retirement accounts almost certainly would allow today's workers to amass a more comfortable nest egg than what Social Security would provide. In return, today's workers would be asked to accept lower Social Security benefits in the future. Reform would put the Social Security system on a more stable fiscal footing.

Equally significant, workers would own their benefits rather than relying on an unreliable government pension system. Lower-income Americans could make private investments for the first time, becoming owners of financial assets and boosting their financial independence in the future. Retirees could pass on unused benefits to surviving family members.

Reform carries some risk, but the greater risk lies in doing nothing. Social Security will begin paying out more than it takes in by 2018. Reforming Social Security will not be easy, but the right place for South Carolina's congressional delegation to be is at the forefront of this bold effort.