EDITORIAL: The price of political demagoguery on Social Security

As Social Security hurtles toward insolvency, its path is a reflection of missed opportunity. In particular, many Democrats over the years have preferred performance demagoguery designed to score political points over the difficult task of finding solutions that actually address the system’s long-term structural deficiencies.

A case in point was President George W. Bush’s Social Security reform plan in the early 2000s.

Mr. Bush’s proposal, offered at a time when the Trust Fund was running surpluses, included “progressive price indexing,” which would have slowed annual benefit increases for those with higher benefits, and a proposal to allow individuals to invest a tiny portion of their contributions into personal accounts.

Democrats went apoplectic. Nevada’s Harry Reid and his cohorts began harping on the proposal as a “risky scheme,” claiming it would result in lost benefits. History hasn’t been kind to this analysis.

The Wall Street Journal noted this week that, had Mr. Bush’s reform become law — it never got a vote in Congress — workers would have benefited handsomely. If an employee beginning in 2011 “had invested $83 per month in an S&P index fund and reinvested dividends, the account would have grown to some $55,000 by now.”

A more long-term view presents an even harsher assessment of the Democratic scare-mongering that devoured this proposal. “If you were 22 years old in 2011,” the Journal calculates, “you’ll miss out on more than $800,000 that you could have accumulated under the Bush plan by the time you retire” based on historical market returns. “And that money would continue to grow as a worker’s personal property,” unlike Social Security.

The Journal’s analysis dovetails with a 2025 study by Andrew G. Biggs of the American Enterprise Institute, which found that Mr. Bush’s “price indexing” plan would have increased benefits for very low, low and middle earners by 3 percent to 8 percent. So much for the “cuts” Democrats predicted.

In addition, Mr. Biggs concludes, “Had Congress approved Bush’s proposal and signed it into law, the reform would have extended Social Security’s solvency for roughly a decade and reduced the program’s long-term funding shortfalls by around one-third while protecting benefits for most retirees, particularly seniors who rely on Social Security the most.”

Two decades later, Democrats offer only their one-size-fits-all solution to every issue: higher taxes on “the rich.” That isn’t an answer. It’s an effort to buy time without addressing demographic reality and the program’s inherent fiscal flaws. The costs of choosing demagoguery over substance are high. Americans pay the price today.