Over on the Actuarial Outpost there is a discussion pointing to an article in this past Sunday’s New York Times Sunday magazine on the Social Security “crisis”/”non-crisis” (depending on whom you’re talking to).
It seems to do a fairly good job of explaining the problem, although I think the author doesn’t appreciate enough the need for actuarial conservatism (when the penalty for the future being worse than expected is much worse than the extra price paid if the future is better than expected…you’re going to be conservative). The closing paragraph sums it up nicely:
Prudence dictates taking steps now to minimize the possible shortfall. This could include raising the cap, some modest cuts and tax increases and a gradual redeployment of the trust fund into assets that may not be tapped, willy-nilly, for whatever legislative purpose. But only a real crisis would dictate undoing an institution that has provided a safety net or retirees…. And, in looking at Social Security today, the crisis is yet to be found.
In other words, make the small changes that ought to be made to prevent future problems that are within a reasonable, if conservative, realm of possibility; but don’t make wholescale massive changes solely because the system is in an exaggerated “crisis”. If you’re going to change/revise/eliminate social insurance to satisfy political/economic doctrines that you subscribe to, it’d be nice if you would be honest about your motives, rather than hiding your agenda within the hysteria of a constructed “crisis”.