Saturday, September 12, 2009
Social Security's 9-11: It will run a deficit in 2010, according to some experts: means testing coming?
Well, I wonder if September 11, 2009 will be remembered as 9-11 for Social Security. That’s what Bill Fleckenstein of MSN Money will have you believe, with an alarming op-ed that greeted Dell users on IE signon (if they go to Dell’s MSN site) early today. The article is “Social Security cruch coming fast,” link here.
Allen Sloan, senior editor of CNN’s and Fortune’s Money column, has a piece dating all the way back to July 30, 2009, “The next great bailout: Social Security: Fortune's Allan Sloan takes a look at the troubled retirement program, why it's more important now than ever - and how lawmakers can repair it.” Link here. Sloan says that Social Security will start running a deficit as early as 2010, not 2015 as forecast a few months ago.
Sloan offers a complicated discussion of the way the accounting for the Social Security trust fund really works. He says that it is really a social insurance program, funded by a regressive tax, to make one generation pay for its parents. It’s not a Cato defined Ponzi scheme.
He offers some solutions at the end, including increasing the tax base, raising the retirement age to 70 (we’re living “too long”), reducing benefits somewhat for high end people (that sounds like means testing – this is social insurance, not an annuity) and change the law requiring 75 year solvency.
It’s pretty complicated.