Social Security Reform Faces Huge Challenges

President Bush wants to overhaul Social Security by putting money management into the hands of the people. He is between a rock and a hard place with this one.

On the one hand, you have an estimated 11,000 pork-barrel projects being voted into law by legislators in Congress who are interested in channeling money into their districts so they'll be reelected.

I still remember the scandal in the early 1990s in which it was revealed that some members of Congress had written bad checks on their personal House bank accounts. If people responsible for balancing the budget could not balance their own checkbooks, getting Social Security out of their hands is a good idea.

There are also declining population figures, indicating fewer people entering the workforce. Where does the nation's legal pyramid scheme called Social Security receive the income to pay retirees? From paycheck deductions. Fewer workers means fewer paychecks, which means less money for Social Security benefits. Couple the smaller workforce with an immense aging population, and it's not hard to see disaster looming.

On the other hand, the American people are saving less and spending more. For the last two decades, the banks have recorded a slow and steady drop in the number of savings accounts. And Americans have noticed a slow and steady drop in the interest rates their savings accounts receive, now about 2%. With interest rates this low, how will latecomers prepare for retirement?

That poorer people are not saving is seen in other ways.

Wal-Mart stores have noticed that their sales peak on paycheck days. This indicates an appalling lack of savings in a group that needs it most: low-income Americans. Where are these people getting training to save for the future if they are already struggling week by week?

The newsworthy scandals of several Wall Street brokerage firms leaves me wondering who is in charge of the working people's money. Too many Americans believe the lie that if they leave their money in the stock market long enough, they will make money. Why haven't history's stock market crashes taught us to be watchful instead, and to keep an ongoing appraisal of personal investments?

When stocks were headed down during 2000-2001, were stock brokerage firms telling their customers to sell? No, because, in addition to fees for transactions, these companies make money based on the size of their customers' accounts.

What incentives do Americans have to save? We have a Congress unable to rein in its own spending excesses, low- interest savings accounts, working people's decades-long dependence on the government to care for their needs, widespread inability to plan for the future and a Wall Street structured to retain investors' money, sometimes against the well-being of those investors.

It will take longer than four years to change the money habits of a people who would rather spend than save.