The Social Security (SS) program is one of the most successful government programs in US history.

Since its inception in the 1930s, SS has given many groups of Americans a vital monthly income, including retired, disabled (’56), divorcees (’65 for women ’77 for men), and the family members of workers who have died.

Nowadays, the government is concerned that in future decades, SS won’t have the resources to fully pay a larger than normal number of retirees and a national population of beneficiaries living longer lives. President George W. Bush thinks SS needs to be totally reformed, with private accounts for workers 55 years old and under. While Bush says they will help strengthen the program, other political officials and observers aren’t so sure, claiming they will make the system much worse.

Bush is adamant in reforming SS now. Even though his controversial ideas on this issue weren’t the reason he got reelected, the system is in better shape than he thinks it is.

There is a method to Bush’s madness. These accounts wouldn’t be available until 2009, when only people born between ’50-65 can apply for them. In 2010, people born between ’50-78 can open accounts. It is only starting in 2011 that anyone born after ’50 can opt in these accounts.

Why start the program in 2009? Maybe Bush thinks that’s the year we can afford to start them, as he said recently that his goal (weak as it is) was to cut the deficit in half by 2009.

If private investment accounts do become law, eligible workers will not get to invest their money into just anything. According to the public policy analysts at factcheck.org, all proposed ideas for these accounts call for interested workers to redirect one-third of their SS-bound payroll taxes to a few “broadly diversified” stock and bond funds similar to those that federal employees enjoy in the Thrift Savings Plan, NOT in risky territory like commodities.

The administration claims private accounts should generate more than a 3% rate of return to beat what SS provides. They predict account holders will generate well over a 4% rate of return for their investment.

There is a catch: participating in these accounts requires you to give up some promised benefits. What’s more, if Bush models his plan after the 2001 “Commission to Strengthen SS” report, there will be benefit cuts for everybody, in addition to cuts private account holders will experience. Thus, private investment accounts are risky indeed.

On the other hand, this reform plan includes plenty of ideas not related to accounts. That same report set early benefit levels according to the rate of inflation, replacing current policy which sets benefits to the rate of wage growth throughout a worker’s career.

CNN found that Bush is considering other alternatives such as limiting benefits for wealthy retirees, increasing the retirement age, and discouraging people from taking early benefits, which “baby boomers” are eligible for starting in 2008. He did rule out increasing the payroll tax by 12.4% according to later reports.

Currently, those who earn up to $90,000 pay taxes into SS. MSNBC reported that Bush is considering raising the income ceiling to well over $100,000 putting more money into the system. This is such a great idea that Senator Charles Grassley (R-Iowa) promised that any SS reform proposal would definitely include such a raise.

Now let’s straighten out some “misinformation” on the state of SS. Bush often says SS is expected to pay out more in benefits than taking in beginning 2018, subsequently opening a path towards “bankruptcy.”

This isn’t true. According to the Center of Budget and Policy Priorities. On their website, cbpp.org, SS actuaries say that by 2018, the SS Trust Fund will be holding $5.3 trillion in assets in the form of Treasury bonds. Since revenue from payroll taxes won’t be enough to solely pay out benefits, a portion of the interest earned from those bonds would be used to pay for the shortfall in SS benefits, along with general tax revenues, starting in 2018. Because of these interest earnings, the actuaries predict that the Trust Fund will actually hold $6.6 trillion in assets by 2028.

This is good news for those concerned about the state of SS-it makes the argument for private accounts weaker. Also, the SS Administration says that with no changes to its policies, the system will be able to pay out 100% of benefits to all recipients for the next 37 years!

After 2042, is when the problem begins; only about 75% of SS recipients would receive their benefits in full. Still, the system would not be bankrupt in 2042. It would still be getting revenue then in the form of payroll and income taxes collected from a portion of SS benefits. In fact, the SS trustees say that even after the year 2042, the average benefit for recipients will be significantly higher than it is today. In addition, the shortfall in revenue over the next 75 years is projected to only amount to $3.7 trillion.

Look at it this way: in just three years, Bush signed on to over $1.7 trillion worth of tax cuts, which contributed to this, and other federal budget problems. Therefore, America can definitely trim or completely eliminate that shortfall in 75 years with some adjustments to SS, not an overhaul.

So are these private accounts really worth pursuing? I don’t think so.

One reason is that workers buying into this type of plan must give up traditional benefits in order to hold an account, in addition to proposed certain cuts of all recipients’ benefits. It might not be worth it for the government either, who will have to borrow money in the trillions to make the program work. CNN says that diverting one-third of payroll taxes to investments would cost the government $2 trillion over 10 years in transition expenses, adding to an already historically large deficit. On the other hand, the ideas that don’t include “accounts” are worth pursuing because they seem more logical and less costly, even though they would be inconvenient to some and involve sacrifices by many Americans.

Fortunately, Bush hasn’t signed on to any specific plan as of yet so there is still plenty of time for his administration and Congress to come up with a solution to this impending problem.