It is a logical impossibility for Social Security to go bankrupt. We can voluntarily choose to suspend or eliminate the program, but it could never fail because it “ran out of money.”
Nonsense. It can run out of money in two ways. The nominal value of the trust fund can hit zero. Technically it would avoid bankruptcy, because the payouts are required by law to be but to the current income from social security taxes when that happens. The problem here is that it would involve a massive year over year cut.
The other way it can run out of money is that it can cost too much to be affordable. That can happen whatever the value of the trust fund, since the fund is an accounting entry not a real store of wealth. (The federal government owes itself money which means the asset and the liability cancel out to zero.)
Yes if productivity explodes upwards, then supporting more retirees per worker becomes easier (assuming constant standards of living for the retirees, or at least standards that grow slower then productivity increases).
But productivity is not exploding upwards and there isn't a lot of reason to think it will, at least not enough to cover the liabilities.
Any shortfall can always be addressed in a very straightforward and supremely logical fashion: raise taxes or lower benefits (and it is exceedingly like that even if this occurs, we aren’t talking about anything drastic).
Except that you and many like you wouldn't accept cutting benefits. Other then the cut that's already in the law (not paying out more than SS taxes bring in when the number in the "trust fund" equals zero dollars) It would require a change in law, that would take a majority of the house, a super-majority of the senate, and a presidential signature. Which wouldn't happen. Because of the cut already built in to the law the program going broke could be avoided, but the problem there is that if you don't reform it over time, if you wait until the built in automatic cut happens, it would be a massive year over year cut to current (at the time) retirees. There would be a political firestorm about that.
As for increasing taxes, the feds have never been able to pull in enough money as a percentage of GDP to cover the projected costs of these programs over a sustained period. The only time when they did do so for more than a year was during WWII, with a suppressed civilian economy (and with price controls and other measures distorting economic stats including the GDP figure, so even that is uncertain). So raising taxes can't solve the problem either. Single digit tax rates, 90 percent tax rates, it didn't matter the feds haven't been able to pull that much out of the economy. (And even if they could and did it would leave nothing for anything else besides entitlements and interest on the debt.) |
