YOU can see why President Bush’s decision to charge straight into reforming America’s state pension system, a fortnight before his second inauguration, has even his die-hard supporters worried.

True, he has called so far only for a “debate”. But leaks from his advisers have shown the outline of their thinking.

Reform on the scale which he appears to be contemplating lack almost any political appeal beyond the nebulous claim of prudent financial housekeeping. It would almost certainly bring cuts in pension benefits of a kind regarded as taboo since Franklin Delano Roosevelt’s New Deal, which helped drag the US out of the 1930s Great Depression.

It would add to the record budget deficit just as that is moving from an abstraction to a biting political concern.

Its success depends on a gamble which many contest: that people’s own stock market investments would perform better than government assets. But higher returns come with more risk and the President cannot be short of people making this point.

It would be so huge and complex an endeavour, and the consequences so hard to predict, that some have likened it to Hillary Clinton’s disastrous attempt to reform the US healthcare system in the first heady days of her husband’s presidency. Some, too, add that Bush’s struggles to drum up support are leading him to exaggerate the threat — with echoes of Iraq.

That is, in short (although few arguments on this subject are short) the case against Bush’s enthusiastic campaign. A significant group of Republicans on Capitol Hill are intensely wary of the plans. Newt Gingrich, the former House Speaker, has warned that the cuts in benefits could cost Republicans control of Congress.

Other Western governments have looked on nervously, loath to wade into a quagmire of American domestic politics and yet unhappy at the notion that US budget deficits might fail to come down, with possible consequences for their own interest rates.

Given all this discomfort in the first few weeks of the New Year, why is Bush doing it? And is he right to do so? There is a problem to be solved; he is right about that. The question is when it begins to bite.

Not right now. For another 13 years, the Social Security system, as the US calls its state pension scheme, will keep taking in more in taxes than it needs to pay out.

Even when these flows reverse, the system is expected to be able to pay the present level of benefits until somewhere between 2028 and 2042; some say even a decade later, if the economy grows strongly.

At that point there will be too few workers paying taxes to support the pensions of the swollen ranks of the retired, and benefits will plummet, or taxes will soar, or the deficits will gape wider.

Everyone can do the arithmetic to show that this shortfall will happen, to some extent, at some point. But small changes in the main assumptions — about the economy’s growth, the performance of the stock market, not to mention the rate of immigration — produce very different answers.

On some calculations, this is a crisis; on others, an inevitable readjustment in the expectations of what the state will give, but one that will emerge gradually enough to be politically digestible.

Why, then, is Bush embarking on a campaign which makes the invasion of Iraq look neat and predictable? In bald political terms, he is no doubt right to reckon that he would get some support among younger voters for the notion of personal investment accounts. Indeed, some of them appear to have accepted already that it is the only way they will get a pension, no longer expecting much from the state.

But he may also have an eye on the history books, wanting a huge landmark to stand for his second term.

If so, however, that is a dangerous motive. Iraq and his first term have not left him on the strongest ground to argue for urgent, dramatic action in the face of a threat which many feel is overstated.

THE BIG IDEA

• Allow younger taxpayers to divert some money they pay in taxes to their own investment accounts
• Government would cut guaranteed retirement to those taxpayers
• Bush argues that this will close looming gap between amount put aside for pensions and what will be needed as investments will outperform government assets
• Government will still have to pay at least $2 trillion in “transition costs” in the first decade

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