More bad news for Social Security

Denial, as the saying goes, is not just a river in Egypt. Last week, the Congressional Budget Office (CBO) released a report suggesting there will be a slightly lower actuarial deficit and a later insolvency date than previously estimated by the Social Security Administration itself. Opponents of Social Security reform immediately seized on the reported improvement in Social Security finances to argue against fixing the program.

what is wrong with raising the retirement age

We're talking about Social Security. When it was set up, it was sold not as a tax supported charity, but as a government run business like the Panama Canal or TVA. It's time for all of us to accept the fact that money was accepted under the terms of a business contract, but that the business is no longer a good idea and has to be shut down.

You can't take money and then change the terms of the contract if you're running a business-- that only works when you're taxing and spending. There are limits with what you can do with tax'n'spending also. If we follow the precedent of 1790 (paying off the war bonds), we'll want to honor commitments made when Social Security money was taken in. Or not-- we could simply reduce benefits to a token level or just eliminate paybacks altogether. Throwing principle and reputation to the wind, we could also declare treasury bonds void and not have to pay back $7,217,554,314,339.98. Russia did it in 1920 and regretted it- it's not nice to have a bad credit rating.

A prediction (you heard it first here). Social Security liabilities will be paid off enough to shore up America's bond rating, and the program will be gutted. Good riddance.

Here's a different prediction (and you heard it here first): Social Security will not be gutted, but will die a very slow death in a way that most recipients won't even realize. The U.S. government will (and already has begun) deliberately understating the consumer price index (CPI), so automatic cost-of-living increases in Social Security benefits will not keep up with the rate of inflation.

By the time we get to 2040 or so, a typical monthly Social Security check won't even be enough to buy a bag of groceries.

Your scenario is interesting and plausible. The idea is that the Federal Government is clever and methodical and will fool the American people. Back in 1999 when I left the Federal Gov't work force, I didn't remember my colleagues being either clever or methodical, but things may have changed.

My prediction that the feds would fail to keep Social Security running was just what I remembered with most other federal schemes. The idea would usually be to keep the thing running on paper (like say, the Federal Helium Blimp Commission), and blame all reduction of activities on others.

OTOH, that is a lot like what you said too.

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