Social Security does not face an immediate financial crisis but lawmakers would be wise to reform the program before it does, U.S. Comptroller General David Walker said at a House Ways and Means Committee hearing on March 9.

While the crisis is not immediate, the challenge is more urgent than it may appear.

"While the crisis is not immediate, the challenge is more urgent than it may appear since the program will experience increasing negative cash flow starting in 2018," Walker said. "Acting soon to address these problems reduces the likelihood that Congress will have to choose between imposing severe benefit cuts and unfairly burdening future generations with the program's rising costs. Acting soon would also allow changes to be phased in so that the individuals who are most likely to be affected, namely younger and future workers, will have time to adjust their retirement planning while helping to avoid related 'expectation gaps.' On the other hand, failure to take remedial action will, in combination with other entitlement spending, lead to a situation unsustainable both for the federal government and, ultimately, the economy."

Walker gave the personal investment accounts that President Bush wants to make a part of Social Security a mixed review, noting that, "individual accounts, by themselves will not lead the system to sustainable solvency ... [and] may involve significant transition costs" but adding that such accounts "can contribute to sustainability as they could provide a mechanism to prefund retirement benefits that would be immune to demographic booms and busts."

Walker mentioned several other possible reform possibilities, including coverage of all newly-hired state and local workers. He noted, though, that while this would increase program revenues in the short-term, "such new participants would increase future spending commitments as well."