The third rail

The nation's Social Security system is actuarially bankrupt. Estimates of the unfunded liabilities of the system run as high as $10 trillion.

Without changes, as retiring Baby Boomers clog up the rolls, Social Security will not have enough money to pay promised benefits to all retirees starting in 2041.

Most of the other Republican presidential hopefuls have voiced general support for privatized individual accounts along the lines of those unsuccessfully proposed by President Bush in 2005. But last week former Tennessee Sen. Fred Thompson became the first candidate of either party to offer a detailed proposal to fix the Social Security retirement supplement system.

Sen. Thompson's plan would create voluntary, government-matched savings accounts which would actually become the property of the individual. Under Sen. Thompson's plan, Americans would be offered the option of contributing an extra 2 percent of their salaries to a retirement savings account. Just as many private employers contribute to their workers' 401(k) plans, so under this plan the government would contribute $2.50 for every dollar that an individual saved, up to a maximum of $12,000 per year.

To pay for the savings accounts and keep Social Security solvent, Sen. Thompson would change the way benefits are calculated, indexing them to prices rather than wages. Economists say that over the next 50 years, benefits would grow much more slowly under Mr. Thompson's proposal than in the current system.

Social Security "is unsustainable as presently constituted, and everybody knows it," said the former senator and "Law & Order" TV performer as he announced his plan Friday.

The contrast between this approach and those offered by Mr. Thompson's chief Democratic rivals could hardly be more stark. Democrats want to solve the looming crisis by applying their standard, one-size-fits-all solution: "Tax the rich."

Currently, only the first $97,500 of a worker's earnings are subject to the Social Security tax. This makes sense (to the extent anything in the system does), since eventual benefits are also capped.

But Democratic Sen. Barack Obama wants to "solve the problem" by eliminating the cap entirely -- taxing all earnings, even of millionaires who will never need or receive a penny of benefits.

"If you lift the cap completely, that would be a $1 trillion tax increase," Mr. Obama's Democratic opponent, New York Sen. Hillary Clinton, told reporters Monday.

Good point. But should she be elected, Sen. Clinton's unwillingness to offer any detailed solution of her own merely increases the chance such an economically debilitating tax-the-rich "solution" will be adopted. (Hint: companies only create new jobs if someone retains enough earnings to invest in them.)

Instead, carefully stepping over the famously electrified "third rail" of American policy, Sen. Clinton settles for assuring us that "growing the economy" will take care of the problem.

Meantime, the Democrats' surrogates in think-tank land wasted no time attacking Sen. Thompson's thoughtful proposal.

"Price indexing would represent a historic shift in Social Security, transforming it from a retirement program to an increasingly paltry safety-net program," said Jason Furman, an economist at the left-wing Brookings Institution. "Price indexing would break the historic pact with senior citizens." In fact, Social Security was never supposed to be any more than a safety net, in the first place. And since the Social Security "vault" contains nothing but IOUs drawn against future wage earners, surely any "historic pact" was broken long ago.

Then came the next canard on the liberal script: You and I may be smart enough to save and invest for the future, but not Blue-Collar Joe. Too many poor people would not participate in the voluntary savings account program, leaving them with too little money to live in retirement, Mr. Furman argues.

In fact, typical workers would actually do better by using the savings accounts to create a nest egg they would own, Mr. Thompson's aides explained last week, hauling out charts and graphs to illustrate their points. "They would have a chunk of money in the hundreds of thousands of dollars, for most people," Mr. Thompson said.

The former senator from Tennessee deserves credit for tackling a controversial issue head-on -- stepping in to take the baton from President Bush, who abandoned his own private savings account proposal in the face of withering congressional opposition in 2005.

"Nobody wants to talk about it, except to say it's a big problem and then change the subject," Sen. Thompson told reporters as he unveiled his plan. "If somebody's got a better idea, put it on the table. But don't talk to me about economic growth doing it."

Spoken like a leader.