Social Security Solution

On a normal day, this piece from Opinion Journal, forwarded along by the Lord of Truth, might have been the first thing I commented on...

The conventional Beltway wisdom says Social Security reform is dead, thanks to near-unanimous Democratic opposition. Well, not so fast. Republican reformers are introducing a new plan to invest Social Security surplus funds into personal accounts that has the potential to shake up the debate.

Wisconsin Congressman Paul Ryan and South Carolina Senator Jim DeMint are calling for legislation to bring an immediate halt to the ongoing political raid on the surplus payroll taxes collected by Social Security. Congress now spends that cash on current programs--from cotton subsidies, to defense, to the Dr. Seuss Museum. Every day that Congress fails to act, another $200 million is spent rather than being saved for future retirement. Daniel Patrick Moynihan once called this "thievery," and if corporate America were engaged in this type of accounting fraud Eliot Spitzer would be hauling CEOs to jail.

Instead of spending this retirement money, the reformers would allow individual workers to divert every surplus Social Security dollar--from now until the extra cash runs out in 2016--into personal retirement accounts. For the record, we endorsed this idea some months ago, so we're glad to see it gaining steam.

...DeMint-Ryan would allow workers to create individual personal retirement accounts and place marketable government bonds worth their portion of the Social Security surplus into these accounts. Think of this as creating 140 million "lock box" accounts, one for every American worker. After three years, workers could trade these Treasury bonds and invest instead in higher-return mutual funds containing a combination of corporate stocks and bonds.

...Another benefit is that Congress wouldn't be able to keep using the Social Security surplus to disguise its other spending habits. This means more-honest federal budgeting, and we hope more pressure for spending discipline. Members can check out a list released this week by the Free Enterprise Fund of $80 billion in corporate welfare and pork barrel projects that could be extinguished to make up the difference.

As for the politics, this calls the bluff of Democrats who claim to be the sole protectors of the Social Security trust fund but have done nothing to stop depleting it. Do they want to protect it or not? And by investing only surplus payroll taxes into private accounts, the proposal blunts the (specious but politically potent) attacks from AARP and the left that personal accounts will endanger the program's solvency. The DeMint-Ryan plan enhances solvency by preventing raids on the trust fund, which is a practice that has long infuriated senior citizens.

Politically, this is brilliant. Tactically, it paints the Dems into a corner. Man, if Karl Rove is behind this, the "Evil Genius" tag may be an understatement.