Outside of Social Security, the automatic IRA, a solution proposed by Heritage and Brookings experts, would make saving the default position for many workers and make it easier for firms to help their workers save. The latest personal savings numbers show how the great relevancy of such innovative solutions.

The Commerce Department reported Thursday that the savings rate for all of 2006 was a negative 1 percent, meaning that not only did people spend all the money they earned but they also dipped into savings or increased borrowing to finance purchases. The 2006 figure was lower than a negative 0.4 percent in 2005 and was the poorest showing since a negative 1.5 percent savings rate in 1933 during the Great Depression.

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Serious people do not put this forward as a solution to Social Security's woes.

Here'€™s the problem with such scenarios: Eliminating the cap only delays the crisis about six years, according to the Social Security Administration's actuary. Instead of rupturing in 2017 as now projected, Social Security would rupture in 2024. The interim costs would be extremely painful, especially for the estimated 10 million Americans whose annual take-home pay would be reduced on average nearly $5,000 and the legions of small-business owners and self-employed people whose taxes and operating costs would spike. A recent Heritage Foundation econometric study projected 1.1 million lost jobs during the decade after the cap is removed.

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To put the whole story in terms of analogies: Cap removal is to Main Street what Sarbanes-Oxley is to Wall Street -- the sort of blow almost everyone regrets, but only later.

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Presidential adviser Karl Rove...attended conservative activist Grover Norquist's weekly meeting on Wednesday and offered to bet anyone $5 that there would be no increase in the payroll tax base. But Bush himself has not unequivocally ruled out such a move, as he has any increase in the personal income tax.

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Research studies have shown that auto-enrollment could lift participation from about 70% to as much as 90% of workers provided with access to a 401(k), John said.

Opt-out 401(k) plans would have a much bigger impact on new employees, especially low-wage staff, boosting participation to 86% from the current system's 37%.

Some proposals would go much further, expanding 401(k) and IRA access to the about 50% of workers whose employers don't offer 401(k)-type plans.

This would provide workers with the simplicity of savings via payroll deduction.

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So while Republicans have been pushing personal retirement accounts as part of an entitlement fix, Democrats have been pushing personal retirement accounts because they worry about worker insecurity. By enlarging the debate so that it's about savings in the era of globalization rather than just Social Security, negotiators can conjure up the common ground that was missing during the 2005 train wreck.

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Social Security was supposed to be a killer issue for Democrats this election year after they defeated President Bush's reform plans in 2005. But suddenly the tables are turning on several Democratic candidates because of their endorsement of the tax-increase agenda of the American Association of Retired Persons, or AARP.

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Across the nation, a number of states, counties and municipalities have engaged in many of the same maneuvers with their pension funds that San Diego did, but without the crippling scandal — at least not yet.

It is hard to know the extent of the problems, because there is no central regulator to gather data on public plans. Nor is the accounting for government pension plans uniform, so comparing one with another can be unreliable.

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Under a pension overhaul bill that the House approved Friday and the Senate is due to take up this week, companies would be granted explicit legal assurance that they could unilaterally shift some of a worker's pay into a retirement savings plan, such as a 401(k) program, unless the employee specifically opted out.

"This is by far the most important thing in the pension bill," said John C. Goodman, president of the National Center for Policy Analysis. "It will lead to substantially more people being in the system."

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Though no issue is more important for Republicans to "get right" than immigration reform, he said, the skyrocketing costs of Social Security and other federal entitlement costs are a "tsunami that's racing right at us."

"If I'm around in a leadership role come January, we're going to get serious about it," Mr. Boehner said...

"Politicians always start by talking about solutions to a problem that most people don't know is a problem," Mr. Boehner said. "That's what got the president in trouble on Social Security. More time should have been spent laying out the problem."

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As you might recall, I addressed that issue last year, focusing on Social Security reform. I'm not through talking about the issue. I spent some time today in the Oval Office with the United States senators, and they're not through talking about the issue either. It's important for this country -- (applause) -- I know it's hard politically to address these issues. Sometimes it just seems easier for people to say, we'll deal with it later on. Now is the time for the Congress and the President to work together to reform Medicare and reform Social Security so we can leave behind a solvent balance sheet for our next generation of Americans.

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"Ensure Dignified Retirement." Again, sounds great. Mandatory fedoras for men; a 50 percent reduction in Viagra commercials. But no: The Democrats wish to "prevent the privatization of Social Security," because you cannot be trusted with your own money. It's an interesting definition of dignity: waiting by the mailbox for your government check.

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David John, a senior research fellow at the Heritage Foundation and an expert on flood insurance, said those expansions will "likely result in more losses and more deficits in the future." He said the reforms offered by the bill are not enough to make it self-supporting, much less pay off its debts.

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This year's annual reports for Social Security and Medicare show the combined unfunded liability of these programs is $84 trillion in today's dollars ? up more than $7 trillion from last year's report. The unfunded liability identifies the difference between what has been promised to current and future generations above what will be collected in taxes. Social Security and Medicare will consume an ever-increasing portion of workers' incomes unless the government either breaks its promises to future retirees or makes significant changes to our elderly entitlement programs.

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A tsunami of entitlement spending is threatening our economy, while providing no real security to retirees. We have made promises that we cannot keep. Under moderately optimistic scenarios Social Security, Medicare and Medicaid will in the decades to come grow as large as the entire government is today. Someday the government will be forced to make drastic cuts in these programs, or crippling increases in taxes on workers – or both. The longer we wait to make the hard choices necessary to repair these programs, the harder the problem becomes. My children and their children will not receive the benefits we will enjoy. That is an inescapable fact, and any politician who tells you otherwise, Democrat or Republican, is lying.

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