Against the doubters.

EVERY indication is that President Bush is going to make Social Security reform his first item of business when Congress comes back to work in 2005. He has not presented a detailed plan, but the merest outline is already drawing misguided criticism.

The program, in its current state, is unaffordable. By 2018, the program will start sending out more money than it brings in. The government will have to find a way to make up the difference-and that difference is projected to accumulate, over time, into the tens of trillions of dollars.

Under current law, benefits are tied to the general wage level. Since wages are expected to go up in the future, benefits are, too. So we can't grow our way out of this problem: If growth goes up, so do wages and therefore benefits. The benefits formula has to be changed. Tying it to prices instead of wages makes sense. The value of a Social Security check would keep up with inflation and an individual's contributions to the program. But the value would not go higher still.

That solution, however, creates a new problem. Social Security is a bad deal for young workers, who can expect to get back less than they are putting in. Cutting future benefits makes the deal worse. So the president also wants to let people invest some of their contributions to the program for themselves. The government will thus both cut back on unaffordable promises to workers and let them build up more wealth for themselves.

Opponents of this reform package have advanced a number of unpersuasive objections. First is the claim that there is no Social Security problem in the first place. The program has a "trust fund" that will remain solvent until 2040. But the "trust fund" contains only IOUs from the government. Redeeming them will require tax hikes or benefit cuts. So money still has to be found, starting as soon as we start trying to redeem those IOUs-which is in 15 years, not 35. The main alternative solution, a hefty tax increase, would make Social Security a worse deal for the young while impoverishing everyone.

The second main objection is that creating the personal accounts would involve increasing the federal debt burden. But increasing debt now in order to reduce our costs over the long run makes sense. The capital markets already reflect an understanding that the government has large unfunded obligations to meet in the future. If presented with a credible plan to cut future costs while also increasing short-term debt, the markets may not drive interest rates much higher.

Such opponents as Paul Krugman claim that Wall Street will eat up much of the personal accounts through administrative fees. But the Thrift Savings Program for federal workers has offered a fair amount of investment choice without charging large administrative fees.

Michael Kinsley has made an ingenious argument against reform. He notes that personal accounts, if financed by debt, do not increase the total amount of capital in the economy and thus do not increase national wealth. To the extent his argument is sound, it implies that we should try to finance the accounts by eliminating unproductive government spending. But he is ignoring some of the indirect effects of reform, even if it is financed by debt. Personal accounts may increase incentives to work: The more people work, the more they will see their accounts grow. More realistic promises of future benefits may induce people to save more (as may the experience of watching their personal-account returns compound).

Creating private accounts involves moving from implicit to explicit debt. Instead of unfunded promises of future benefits, there would be borrowing today to set up the accounts. The debt would move from being off the books to being on them. Explicit borrowing would probably restrain federal spending. To put it another way: The federal government has, in a sense, been masking its deficits by borrowing from Social Security for years and years. Personal accounts would end that practice and impose a tougher constraint on budget-writers.

Personal accounts would also, over time, increase both the public's financial sophistication and its receptivity to proposals to increase the returns to capital. It might make them a bit more skeptical of government spending, and a bit more likely to support difficult reforms reining in Medicare and the like. Providing the security of ownership, and reducing dependence on Washington, is a worthy goal in its own right. After listening to the doubters, we still think the president's concept is a good one. It is certainly better than the alternatives.