Social Security – How To Keep It Solvent

Social Security is having budgetary problems that are only going to get worse as Baby Boomers retire in mass. Here’s how we keep it solvent.

The Problem

To the surprise of many, Social Security is actually a good and successful program. Unfortunately, it has two problems. The first is population oriented. We currently are going through a population bulge wherein there are more Baby Boomers than there are in the generations following them. As a result, more money is being paid out in benefits to these Boomers than is coming in from individuals in the workforce now. This will continue for the next 20 years or so and will effectively bankrupt the program.

The second problem is fiscal. Social Security has historically run a surplus each year, to wit, brining in more money than it pays out. Given this, the obvious question is where is the money? Well, Congress passed a law that requires the surplus to be given to it in exchange for special treasury notes. Now that Boomers are causing a shortfall, Congress should make good on those treasury notes. Don’t hold your breath on that one. The government doesn’t have any money and can’t make good on the payments, which is why we will probably finally see real reform for this program.

Solutions

So, what do we do to save Social Security for subsequent generations? The answer is a two step process. The first is to stop paying it out to everyone. A person making more than say $250,000 a year or having a net worth over $2 million does not need a social security payout. I really doubt that extra couple thousand dollars a month is critical to them. Given this, caps should be created to cut off such payments.

The second solution is more universal. The age one must reach before receiving benefits needs to be raised. Social Security has never been adjusted for the increased life spans we are living on average. It is time to do that. Moving the qualification age to 72 or higher would effectively eliminate many people from receiving benefits as statistics would indicate many would die before they qualified. It is a cold calculation, but one that needs to be done.

Political Solution

So, why hasn’t this been done? Politics, of course. Seniors are a valuable lobbying source in this country. They vote in droves and the politicians know it is. Whatever politicians say about their interest in helping the country, don’t believe it for a minute. What they are really interested in is getting re-elected. Trying to reform Social Security is not the road to re-election. There will be only two instances when the reform is done. The first is when a President is ending his second term and has political cache or a crisis hits and there is simply no choice.

The Social Security funding problem is a big part of our national debt crisis moving forward. The time has come to do something about it. The solutions are fairly obvious. The politicians that have the will to do it are not.

<< Back to National Debt Articles

Bookmark this page

Delicious Digg Facebook Reddit Stumbleupon Twitter