Thank you for your reasoned and well documented reply.
I do not think we will have to eliminate Social Security and Medicare. However, because of the demographics, I do think we need to change the age at which citizens can apply for those benefits. When SS was started in the 1930s, the average SS recipient had an expected remaining life span of 6 months. We live longer, much healthier lives now. I personally plan to work as long as possible.
80...it’s the new 65.
My point is that default is NOT inevitable. The USA has enough assets to sell to bring the debt down to a manageable level.
We get the side benefit of privatizing all of that land. If we sell the BLM and most national forest land, we can eliminate two agencies infested by environazis as a bonus.
There are severe, long term consequences of default. As you noted, there are numerous banks, insurance companies, etc. that would be bankrupted if the fedgov defaults.
There is a scheme to downgrade Social Security, and to do it in such a way as to neither stick it to anyone, nor to cost the government much to do so.
However, it is likely already too late to do so, because it is reliant on the Bush tax cuts. Here is the idea.
To start with, instead of offering just tax cuts, as such, make SS recipients a deal. If they need their SS money, fine, they can take their deserved check. However, if they have other sources of income, offer them a slightly *better* deal, in the form of a tax cut, if they do not take their SS check.
Then expand the idea to those still paying in to the SS system, that for every year they *don’t* pay into the system, they get the equivalent of that years’ SS payment plus an additional years’ payment put into a private retirement account. Again, if they choose to do so.
The final result for this would, in a few decades, reduce those paying into the SS system for benefits to just minimum wage employees with no other retirement, and people who are too overwhelmed by thinking about it to vie for the better deal.
This would be a SS system a tenth of the size it is today, and fully solvent.
Importantly, they could be a similar process to downgrade Medicare and Medicaid, but the best way to achieve that is likely to make them “block grant” programs for the states with fixed rules. And the feds could not enlarge upon, or coerce changes beyond these fixed rules unless the states agreed to the changes on their own.