According to this story in the Wall Stree Journal, the Democrats do have a plan for Social Security reform, and the reality of that plan may actually be worse than doing nothing. The window for the Republican controlled Congress to push through a sensible plan is rapidly closing. Now is the time for action, or we may be dealing with the consequences for lifetimes.

That’s an opening Republicans might try driving a reform plan through. But in granting this opening, Mr. Hoyer has revealed a broader political strategy. Without control of Congress or the White House, the left has been looking for a new power source, and they may have found one in large pension funds. The AFL-CIO and other labor unions are testing the waters by publicly protesting against Charles Schwab, Edward Jones and other investment houses in hopes of scaring them away from the Social Security debate. The Labor Department is now looking into accusations that Big Labor is threatening to pull pension funds from investment houses that refuse to play along. Making such a threat may violate a union’s fiduciary responsibility.

Regardless of what the Labor Department finds, this is where Republicans might want to start considering what will happen if they do not pass Social Security reform this year. One popular theory in Washington is that President Bush has firmly implanted the idea of reform in the national consciousness, but that it now must take root there over the next four years or so–into the next president’s term–before it can be enacted into law. There’s even a sound bite: President Hillary Clinton will sign Social Security reform into law, just as Bill Clinton signed welfare reform.

The symmetry is appealing, but misleading. The danger in losing the Social Security fight this year isn’t that President Bush’s reform agenda will die along with it, but rather that it will live on. President Clinton had to be brought to welfare reform kicking and screaming. But President Hillary or another Democrat will likely be more shrewd and embrace reform. Doing so would allow Democrats to infuse those reforms with Mr. Hoyer’s ideas of using the government to invest funds in the stock market. We’ll likely get a mix of higher taxes, reduced benefits for some, and “diversified risk” with publicly invested money. It will sound like a middle-of-the-road compromise. But if it comes to pass, it will give the secretary of labor and the other trustees a new tool to influence financial markets for political reasons.

Republicans didn’t have to let this genie out of the bottle. But they were sent to Washington to make fundamental changes to the welfare state, and now they have a limited time to get their ownership society wish. If they miss this opportunity, it may turn out that all Republicans will have succeeded at doing is setting the stage for a massive expansion of the federal government.

Be afraid. Be very afraid.

Hat tip: PowerLine

Cross posted at The Wide Awakes