Social Security: The Phony Crisis, by Dean Baker and Mark Weisbrot. University of Chicago Press, 176 pages, $22.00.

Economists Dean Baker and Mark Weisbrot lay out a devastating critique of those who say Social Security is going broke and that something drastic needs to be done. Their useful book deconstructs the gimmicks, accounting tricks, and rhetorical devices used by those who advocate overhauling the system.

This peer-reviewed book, published by a respected academic press, is a succinct, easy-to-read, and fact-packed economic and logical rebuttal to the assault on social insurance. The book is also an indictment of an economics that, as Baker and Weisbrot see it, has been manipulated to further the goals of those interests that have long opposed Social Security.

Baker and Weisbrot contend that the program is in excellent health. From a purely economic perspective, they are correct. Social Security is entirely affordable in the future even under the worst-case scenarios. The authors acknowledge the possibility that changes might have to be made to bring in new revenue. But they say that workers in the future would, because of better living standards, still be better off after paying a higher tax. However, others in the center-left coalition opposed to Social Security privatization have found that a hard case to make.

The book makes an argument about stock market returns that can be considered a genuine breakthrough. Privatization advocates use an estimate for future stock market returns based on a historical average. "It is easy to present a story in which everyone gets rich if the annual rate of return is high enough," the authors say. The problem is that the future assumed by the Social Security trustees looks less rosy. The trustees project that the economy will grow over the next 75 years at a 1.5 percent rate, considerably lower than the 3 percent historical rate. The contradiction is that you cannot have a sluggish economy and a booming stock market over the long run. Once Baker and Weisbrot account for this, the long-term return for stocks falls sharply. This is an important point since the rate of return from stocks is key to the case for privatization. They have found mainstream and conservative allies in this argument, including economist Peter Diamond of MIT, the Federal Reserve Bank of Chicago, and a government advisory board chaired by a vocal entitlement critic and privatizer.

Baker and Weisbrot are sometimes the only voices in Washington making these important technical eco-nomic points. And despite their validation by other experts, they have largely been ignored by the pundit class that has bought the idea that Social Security is in crisis and that privatization is a solution. If this book is used as a handbook for citizen groups, organized labor, senior citizens, and others who are mobilizing to force politicians to level with the voters, the pundit class will discover the force of Baker and Weisbrot's arguments.

Many politicians are beginning to feel the jolt. George W. Bush is making partial privatization of Social Security a central plank in his campaign for president, and Al Gore is clobbering him for it. It will be the job of smart candidates, activists, and advocates to put the electricity back in the third rail of American politics. Social Security: The Phony Crisis can help arm them for the election and the policy battles to follow.