SOCIAL SECURITY AGAIN….Why are Ruth Marcus and the Washington Post so obsessed with demanding that we all address Social Security’s long-term problems right this instant? It’s a mystery. Truly a mystery.
Here’s what they need to think about. The most common solutions to Social Security’s eventual shortfall are (a) a small tax increase, (b) a small reduction in the rate of growth of benefits, and (c) a small increase in the retirement age. Question: are there any advantages to implementing any of these solutions right now, rather than, say, ten years from now?
I’d say no. The advantage to waiting is obvious: projections of Social Security’s solvency are uncertain, and waiting gives us more data. Why try to project 40 years in the future if you don’t have to? Better to wait and see what direction the economy actually heads.
Balanced against that, there really aren’t any advantages to acting sooner. Social Security is currently running a surplus, so increasing payroll taxes today does nothing except increase the size of the trust fund — a meaningless exercise at best, and a positively harmful one at worst. We might need to raise taxes in the future once Social Security starts running a deficit, but raising them now does nothing at all to change either Social Security’s future obligations or the source of its future funding.
As for ideas (b) and (c), what’s the point of locking ourselves into them now? If we wait ten years, not only will we know more about the real shape of the future funding problem, but we’ll still have 25 years or more to gradually introduce any changes we think we need. Do we really need to give beneficiaries more than 25 years notice that they might have to retire one year later than they think? Or that after they retire their benefits are going to increase at a slightly slower rate than the law currently requires? I don’t see the point. 25 years is plenty of warning for changes as small as the ones we’re talking about.
Bottom line: 2017 is a better time to deal with Social Security than 2007. Raising taxes now doesn’t accomplish anything, and if it turns out that we need to reduce benefits we can do it in 2017 just as well as we can do it today. For now, we should put Social Security on the back burner and instead spend time worrying about healthcare costs, nuclear proliferation, and global warming. Those are problems that really do need to be addressed right away.