The retirement squeeze: How would they fix it?

President Bush and John Kerry have argued over many issues, but they've largely avoided talking about one of the most difficult domestic problems facing the US: the future of Social Security.

True, Mr. Bush pushed his proposal for personal retirement accounts during the final presidential debate. Establishing these accounts - which might allow Americans to invest some of their Social Security taxes in the stock market - would be a "vital issue" in his second term, Bush vowed.

But the president didn't say how he'd pay for this change, or what he'd do about Social Security's impending cash crisis. Senator Kerry, for his part, has been similarly vague about his plans.

Yet whoever wins the election may have to make tough choices about Social Security's finances. Baby boomers will be leaving the workforce in large numbers by 2008 - and US pension payouts will then ramp steadily upward. At that point, "by not dealing with the problem you'd be setting up future Congresses for some really painful sessions," says David John, a research fellow in Social Security and financial institutions at the Heritage Foundation in Washington.

Of course, Social Security is just the sort of worthy - and dull - subject that pundits always want included in campaign rhetoric. Many candidates see it as something else: a hyperpoliticized issue that should be handled only while wearing the political equivalent of safety goggles and thick gloves.

Republicans in particular believe that Democrats have used it to scare voters in the past. In his stump speech Bush plays off this perception, saying that in 2000 Democrats ran ads charging that if he won, seniors wouldn't get their Social Security checks.

"The seniors got their checks. And our seniors will continue to get their checks," Bush said last week at a rally in Oregon.

To Bush, Social Security could be a centerpiece of what he calls an "ownership society," in which Americans have more control over, and thus take more responsibility for, the financing of their healthcare and retirement programs.

He has long proposed that workers be able to divert some of their Social Security payroll taxes into voluntary personal retirement accounts (PRAs). Those who opt for this approach would get smaller government checks when they retire - but the difference would be more than made up by returns from their private accounts, which they could invest in stocks or bonds as they see fit, thus earning higher returns on their money. That's the theory, anyway.

These accounts would allow workers to immediately own a portion of their Social Security. That's an idea that's appealing to younger voters, say some experts, especially in light of today's dire talk about Social Security's finances.

"PRAs can give workers a much more secure retirement income than the current Social Security system," says Mr. John.

Shortly after taking office, Bush convened a Social Security commission, which produced three different plans for implementation of personal retirement accounts. Bush politely thanked them, but didn't endorse any of their choices. Nor has he provided any more details about his Social Security plans, other than to say that the benefits of current retirees and near-retirees will be protected.

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