Resident Scholar  Andrew G. Biggs

Today is the 73rd anniversary of the Social Security program, which provides retirement, survivors and disability benefits to over 50 million Americans. While there is reason to celebrate the past, we should also focus on the future. The retirement of the baby boomers and aging of the population will put pressure on Social Security's finances. Between today and 2040, the U.S. population will add three seniors over age 65 for each American under age 20. Social Security is already the largest program of the federal government, and over the next 30 years its costs will rise by 50 percent relative to its tax base.

It's great to make a wish on your birthday, but Social Security reform has too often been dominated by wishful thinking. Many conservatives believe Social Security can be fixed simply by adding personal retirement accounts, without any need to raise taxes or cut benefits. That's not the case. Personal accounts can pre-fund future benefits, which would ease burdens on future generations. But since current payroll taxes are already earmarked to pay today's benefits, personal accounts would require significant extra funds over an extended transition period. Few elected officials are willing to enact the tax increases or spending cuts needed to provide these funds.

But wishful thinking isn't only on the right. Many on the left believe Social Security's insolvency is just the product of pessimistic projections by the program's Trustees and that faster economic growth would eliminate the need for reform. Not so. Most analysts think the Trustees projections are reasonable, and even dramatically faster economic growth would not make the system solvent.

Likewise, while many contend that Social Security's deficits are small and manageable, too few will say how they would fix them. That should tell you something. Social Security is a smaller problem than Medicare, but large compared to almost anything else in the government. Even with clear knowledge of the available policy solutions, anyone who thinks a solution will be painless probably hasn't tried to craft one.

For Social Security's 73rd anniversary, my birthday wish is that policymakers from both sides sit down together and focus on what they will consider doing rather than ruling out what they won't. As each side realizes that its favorite policies won't fix the whole problem, they may become more open to compromising with the other side. With a realistic view of the size of the problem, the options available to fix it, and a dedication to the public interest rather than short-term political advantage, a bipartisan solution is possible. Elected officials owe the public nothing less.

Andrew G. Biggs is a resident scholar at AEI.