Monday, November 01, 2010

Social Security is an Easy Fix
Kevin Drum points to a chart that helps explain why, yes, there is a Social Security issue in the very long term, but no, it's not even close to the challenge that Medicare poses.
This is from page 15 of the latest trustees report. What's important is that, unlike Medicare, Social Security costs don't go upward to infinity. They go up through about 2030, as the baby boomers retire, and then level out forever. And the long-term difference between income and outgo is only about 1.5% of GDP.
This is why I keep saying that Social Security is a very manageable problem. It doesn't need root-and-branch reform. The trust fund makes up Social Security's income gap for the next 30 years, so all it needs is some modest, phased-in tweaks that cut payouts by a fraction of a point of GDP and increase income a fraction of a point.
I would say that even modest cuts in payouts could be quite problematic politically, but not likely to cause France-style riots in the streets over the plan. And small cuts would be far more palatable than  the draconian measures of privatization proposed by Republicans.

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