If this is what President Bush means by “solvency,” can’t we just go bankrupt?

Allow me to explain.

According to the Social Security trustees’ rather pessimistic estimates, in 2041 or 2042, the trust fund will run dry and benefits will have to be cut by just over 25 percent. For months, Bush has traveled the land calling this “bankruptcy.” Now the president has released his own long-awaited plan. It cuts benefits by about the same amount. And he calls that “solvency.”

Same cuts. But one scenario is a looming disaster while the other is an inspired act of statesmanship.

Conservatives are fond of saying that “ideas have consequences,” but, to Bush, hollow labels seem to count for quite a bit too.

Now, there are some details and caveats. The Bush cuts aren’t quite as big as those that the Social Security trustees say will happen at midcentury if absolutely nothing is done at all. He also cuts a bit of a break for the working poor while reserving the full brunt of the pain for the middle class.

But then, as even the president’s budget wizards now concede, his plan only keeps the program “solvent” for a few more years (and he spends a lot more money on a private-accounts scheme). So it’s not like it accomplishes much of anything anyway.

But none of that changes the essential hollowness of the president’s plan. If the issue is simply making sure that benefits remain equal to payroll-tax revenues, that’s easy. Indeed, it’s more than easy; it’s guaranteed, since under the current Social Security law, benefits are automatically cut to the level of revenue coming into the Social Security coffers from payroll taxes and the trust fund.

If we just leave the thing on autopilot it will remain “solvent,” automatically, from now until the end of time.

All the president has done is taken the problem — steep benefit cuts — and redefined it as the solution.

That’s not a plan; it’s a word game.

When most people fret about the “solvency” of Social Security, their concern is not about something as trivial as a bookkeeping entry. They worry because, overwhelmingly, they like Social Security as it is now, with a benefit structure and a guaranteed floor of retirement security like it has today.

They want it to be there for themselves. Or, depending on their age, they want it there for their children or grandchildren. Only there’s a catch. And that is that in the second half of this century potential funding shortfalls could require cuts that begin to make Social Security into something very different from what it is for today’s seniors and what it was for those in the past.

Now, perhaps there’s no way to avoid some level of cuts. But those cuts — which Bush has now embraced as some sort of inspired solution — are precisely what most Americans are trying to avoid.

It’s worth keeping in mind that if the economy grows over the next 50 years at the rate it has over the past 50 — the assumption on which Bush bases his lofty claims for private accounts — this much ballyhooed shortfall will never even arrive. But if changes do become necessary, middle-class benefit cuts are far from the only lever we can pull to put things back into balance.

We could remove or limit the high-income earners’ payroll-tax exemption, the so-called “cap.” We could supplement Social Security with money from general revenue. We could invest a portion of the trust fund in something other than Treasury bonds. We could nudge the retirement age up another year.

Perhaps most immediately, we could forgo the new round of high-income tax breaks Bush wants to be passed — those that would repass or make permanent those from his first term. That in itself would go a long way toward solving the whole problem.

Various mixes of these various fixes would solve the whole problem and be done with it. And it is important not to forget that it is not at all clear that the problem will ever even materialize, at least not at the predicted scope, given increased productivity and immigration.

The important point is that for Bush there’s only one solution — big middle-class benefit cuts.

For most folks, that’s the problem. For Bush, it’s the solution.

And if you’re wondering why Bush is going down in flames in this debate, that pretty much says it all.

Marshall is editor of talkingpointsmemo.com. His column appears in The Hill each week.
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