By all accounts, Social Security is the most successful domestic government program in American history. This year, more than $500 billion will be relatively costlessly taken from the pockets of American workers and transferred to those living in retirement. As a consequence of this program, the poverty rate among the elderly has fallen sharply over the last 65 years, and young people have largely been relieved of the burdensome responsibility of caring for their parents and grandparents in old age.

Yet, as almost everyone agrees, this model program is itself showing signs of old age. By 2018, revenues from Social Security taxes will no longer be sufficient to pay Social Security benefits. As President Bush pointed out in his State of the Union address, the number of workers supporting each retiree has fallen from 16 in 1950 to just 3.3 today, and those entering the labor force will get an infinitesimally smaller return on their contributions than did earlier generations.

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