WE DON’T NEED NO STINKIN’ TRUST FUNDS….I was reading through the comments on this post from yesterday and noticed that it eventually morphed into a wildly confused discussion of Social Security and whether it would eventually go bankrupt. These discussions never cease to amaze me.
Please, forget about trust funds, forget about treasury securities, forget about the fact that Social Security is now in balance but eventually it won’t be. Forget about all that. It doesn’t matter.
Here’s the deal: The government takes in money and pays it out. That’s it. The details are just fluff. Honest.
Last year, the federal government’s tax receipts were about 18% of GDP and expenditures were 19.5% of GDP. In 50 years, when the baby boomers are all retired, Social Security spending will need to increase by 3% of GDP, so total spending will increase to 22.5% of GDP ? roughly what it was back in the socialist hell of 1990. That’s it.
Of course, if you believe the federal budget needs to be balanced in the long term, then that means that it will have to collect 22.5% of GDP in taxes. Maybe you think that’s too much, maybe you don’t, and we can have a rousing argument about it. But that’s all it is. 18% vs. 22.5%.
So don’t get tangled up in minutiae. The simple fact is that (a) of course Social Security is getting more expensive, (b) of course we’re going to have to pay for it, and (c) paying for it ? and getting the budget back in balance ? will require increasing taxes by about 4% of GDP over the next few decades. Not a crisis, just a fairly routine problem that can be solved in a number of different ways.
There’s only one real question here: is it worth it? It’s a question of values, not technical financing details, and that’s what we should be arguing about.
