Where the money is

The report from the Social Security trustees this week contains little new. The real story is that the Bush administration and its allies in Congress continue to botch an opportunity to devise a bipartisan solution for both Social Security and Medicare.

The accompanying chart shows why: Any serious proposal has to retain revenue that would be lost if the tax cuts proposed by the administration and passed by Congress are made permanent. Retention of this money was a precondition for the preliminary Social Security rescue plans that President Clinton and economist Martin Feldstein proposed in the late 1990s. Nearly a decade has been wasted, and revenues have gone to tax cuts that could have shored up the retirement system.

President Bush diverted attention from a consensus solution by trying to partially privatize Social Security last year. In an insecure economy, the monthly Social Security check is the only source of guaranteed income available to almost all retirees. Americans have no appetite for diverting some of their Social Security taxes into risky stock-market accounts.

But many people have not yet grasped that the system will have to change to accommodate the retirement of the baby boomers and their successors. It will require a judicious mixture of new revenues and benefit adjustments, such as an increase in the age for full benefits, to keep the system secure. None of this will be pleasant, and it is best done through a bipartisan commission, similar to the one headed by Alan Greenspan that devised the last major Social Security fix in 1983.

In his State of the Union speech in January the president did call for the creation of a commission, but he also insisted on an extension of the tax cuts. A commission needs the option of using these revenues to devise a just and lasting solution.

Social Security will be able to pay its full benefit until 2040, according to the latest trustees' projection. Medicare Part A, which covers hospitalizations, will reach the same point in 2018. No one thinks Congress will keep retirees from getting hospital care as a result, but policy makers need to start thinking about solutions for Medicare. Again,they involve new revenue with perhaps a few benefit cuts. The Medicare problem should also prompt talks of how guaranteed health insurance can be extended to younger Americans.

''I do not want to stand here another year with just another bad report and another year of inaction," Health and Human Services Secretary Mike Leavitt said this week.

Next year's trustees' report ought to be accompanied by a commitment from the president to abandon the tax cuts for the sake of Social Security and Medicare.