There was a long and mostly confused conversation about Social Security during Wednesday night’s GOP debate. But rather than get sidetracked over whether the pension program is a “monstrous lie” (Perry), “a Ponzi scheme” (Perry again), “tyranny” (yep, Perry), “broken” (Cain), or a great system that Americans are being “defrauded out of” (Romney), let’s just go to the numbers.
Over the next 75 years, Social Security’s shortfall is equal to about 0.7 percent of GDP (pdf). If we increase its revenues by that amount -- which could be accomplished by lifting the cap on payroll taxes -- or reduce its benefits by that amount or do some combination of the two, Social Security is back in the black. Here are 30 policy tweaks that could get us there.
Why does Social Security show a shortfall? As Stephen C. Goss, the system’s chief actuary, has written, Social Security projects an imbalance “because birth rates dropped from three to two children per woman.” That means there are relatively fewer young people paying for the old people. “Importantly,” Goss continues, “this shortfall is basically stable after 2035.” In other words, we only have to fix Social Security once. After we reform it to take account of modern demographics, the system is set for the foreseeable future.
And that’s...it. That’s what’s needed to fix Social Security. All this talk about it being a “monstrous lie” or “a Ponzi scheme” or “broken” is meant to create a crisis to clear the way for radical changes in Social Security. But if folks want to make radical changes to Social Security, they should just make the argument for their proposed fixes. And good luck to them. But in reality, what’s going to happen is that sometime in the next decade or so, Republicans and Democrats are going to compromise on a package that adjusts Social Security by about 0.7 percent of GDP over the next 75 years.