No sooner had President Bush announced his intention to reform Social Security than partisan Democrats rushed to proclaim that, Bill Clinton’s own plan to save Social Security notwithstanding, there isn’t really much of a crisis to worry about.

Well, there isn’t – at least not if you think a massive hike in Social Security taxes, or a corresponding cut in benefits, would be a great legacy to bequeath future generations. But the evidence of crisis in the nation’s social compact isn’t just some far-off, theoretical matter of bookkeeping. In the corporate world, mammoth pension liabilities, representing an excess of promises over reality, already are hitting home.

America’s old-line steelmakers were the first to renege, requiring a federal bailout of steelworkers’ pensions in the 1970s and ’80s. Then came the airlines; Northwest Airlines last week told their workers that if they wouldn’t accept deep cuts in pay and reform of pension obligations bankruptcy would almost surely follow, as it has for U.S. Air and United. Next up may be America’s automakers, struggling with “legacy costs” that make them uncompetitive with the Japanese, Koreans, and now the Chinese.

As a result, the quasi-governmental Pension Benefit Guaranty Corp., formed three decades ago to protect worker pensions, is itself $23 billion in the whole – and facing a corporate world which currently has a $450 billion gap in its pension funds.

The premise behind many of the claims that the Social Security system’s problems have been overstated is that the famously misnamed Social Security Trust Fund contains real assets that can be used to fund future benefits. A mere increase of one or two percentage points in the Social Security tax would be sufficient to tide us over.

But this reckons without the fact that the trust fund exists only on paper. It contains nothing but $1.7 trillion in IOUs. The surpluses have been used to fund other government spending. And the IOUs are expected to grow to $10 trillion-$11 trillion in fairly short order. The nonpartisan Concord Coalition recently issued a white paper declaring that Social Security taxes would have to be raised nearly 50% to cover expected obligations – even assuming benefits don’t continue to rise.

But shouldn’t we be happy to move to European levels of taxation? After all, wouldn’t this produce a kinder, gentler nation? Again, the answer is clearly no – unless you think double-digit levels of unemployment would be kinder and gentler.

Europhiles try to explain the high levels of unemployment as simply expressing a preference in Europe for leisure. But nearly every major government there, including France and Germany, is frantically trying to cut spending and taxes in the hopes of putting people back to work (while shoring up their political bases with anti-American rhetoric). They know that a well-trained workforce for which there is no work is sooner or later a prescription for demoralization and serious social trouble.

Now, even under President Bush’s plan allowing workers to set up personal retirement accounts, there may have to be some tax increases and benefit cuts. Mr. Bush’s failure to deal more forthrightly with this issue has cost him some credibility with the public.

But give him credit for beginning the politically painful process of educating Americans about the potential for disaster. Time is likely to prove him far more right than wrong – while the denialists will be viewed by future generations much as we now view the isolationists of the 1930s. It’s interesting to note that much of the private sector already has reformed its pension system along the lines of the Bush proposal, substituting defined contribution plans over which workers have control for defined benefit plans that were never adequately funded. Most of the problem comes from older industries whose naysaying unions would prefer to dump the problem on the taxpayer.

A good argument can also be made that the only real solution to underfunded pensions is faster, more sustained economic growth. Alas, even in the United States faster growth would require the sort of deep, sustained cuts in government taxing, spending, and regulating that not even many Republicans seem to have the guts for these days.

Mr. Bray is a Detroit News columnist.