Social Security is worse off than you think

How bad off is Social Security?

Well, apparently there are people on death row with a better long-term chance of survival.

Without using those words, that’s pretty much the conclusion of Charles Blahous. He is a senior research fellow at the Mercatus Center at George Mason University and a public trustee for Medicare and Social Security. He wrote a piece recently that argues things are a lot worse than people understand. (Read the full piece here.)

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Blahous said we’re rapidly approaching the point where a political solution to Social Security’s woes is no longer possible. As it is, such a thing would require huge concessions by both sides. That means, “either progressives must accept substantial benefit growth reductions, conservatives substantial tax increases, or both.”

Because neither party is expected to hold a veto-proof majority in the near future, compromise is essential, but it’s also politically impractical.

Blahous uses figures and charts to argue that even the toughest solutions proposed today no longer will work.

“Individuals now planning their financial futures, whether as taxpayers or as beneficiaries, should be pricing in a substantial risk that the federal government will not be able to maintain Social Security as a self-financing, stand-alone program over the long term,” he wrote. “If Social Security financing corrections are not enacted in 2013, or at the very latest by 2015, it becomes fairly likely that they will not be enacted at all.”

Instead, the program might have to proceed as one that relies forever on subsidies from the general fund.

But that means it also would have to compete each year against other national priorities, rather than exist in its own dedicated trust fund (which until now has been routinely plundered to pay for other government expenses).

He paints a bleak picture, indeed. Most public reports are that the program’s real problems won’t begin until 2033. This, Blahous says, makes it seem as if the problems are remote and easily solved. That is not true.

Unfortunately, what is true is that neither party is coming to grips with the idea that, when it comes to the nation’s elderly, dithering is the cruelest act of all.