First, let's put this "almost unthinkable"into perspective. Anything that grows forever becomes very big. If the $15 million spent in 1803 on the Louisiana Purchase had been invested at 7 percent and allowed to grow for the intervening 201 years, today it would be worth more than $12 trillion dollars. Even the mythic $24 cost of Manhattan in 1626 would have grown to exceed $3 trillion in the intervening 378 years, at 7 percent per year. Forty years is a long time, 75 years is much longer, and forever is very long indeed. Any imaginary ball, rolling down an imaginary frictionless plane will pick up a lot of speed. In the real world, we have plenty of time to make the necessary adjustments, which are well within our grasp.

Second, the basic source of the challenge is something we all should welcome: people are living longer, with the typical worker looking forward to almost 20 years in retirement. As a larger and larger proportion of the population retires, it will be necessary to provide them with enough resources to live into a dignified and secure old age. We will need more of our output to care for the old because there will be more old people per worker.

Third, our economy is growing very robustly. As a result, even with the conservative assumptions of the Social Security actuaries, if we do nothing between now and 2030 (when essentially all the baby boomers will have left the labor force) to contain costs of Social Security and Medicare, Lawrence Thompson of the Urban Institute has demonstrated that we can raise taxes to meet all the promises of Social Security and Medicare and still provide the average worker with 20 percent more after-tax income than the average worker of today. That is, the economy will produce enough income to meet our obligations to retirees and provide workers with a rising standard of living.

Of course, we can and should take action between now and 2030 to make the retirement of the baby boomers easier. Carefully structured proposals for the Social Security program by Peter Diamond of MIT and Peter Orszag of the Brookings institution show how a combination of modest benefit reductions and modest tax increases can protect all vulnerable old people. Indeed, Orszag and his colleague at Brookings, William Gale, have calculated that the Bush tax cuts alone add up to three times the projected shortfall of Social Security.

If we do nothing at all, the Social Security actuaries project that Social Security will run into a financing crunch in about 2042. That is as near to us today as the Y2K crisis (remember that?) was in 1962. We have a long time to make wise decisions that protect both workers and retirees. Meeting our promises to future retirees and providing a good life to workers are fundamental condition for remaining a civilized society. We can easily meet this challenge, both arithmetically and politically, if we have the will to. Wringing our hands and wailing does not help.