The Social Security and Medicare Trustees released their 2005 report today on the future of this program. As reported by the Congressional Joint Economic Committee:
"The major findings are that the 75-year unfunded liability of Social Security increased from $3.7 trillion in 2004 to $4.0 trillion in present value today. The present value unfunded liability over an infinite horizon increased by $700 billion from $10.4 trillion in 2004 to $11.1 trillion today.
"Last year, the Trustees reported that Social Security would begin to run annual deficits in 2018; this year's report moves this point one year earlier to 2017. Last year, the date of insolvency was pegged at 2042, but the 2005 report estimates that insolvency will now occur in 2041. The Trustees also estimate that annual OASDI surpluses will peak in 2008 and decrease thereafter until permanent annual deficits begin in 2017.
"The dates of insolvency and perpetual annual deficits have moved closer, and the cost of doing nothing to fix the system is massive."
Social Security an entitlement that has grown way beyond its original intent and original scope. Minor fixes around the edges or higher taxes are not a solution. Even partial privatization is not a permanent solution, as it is too little and still keeps the federal government in control.
In 2041 I will be older than my father is today. He is in his 80s and is still an active entrepreneur. When social security was set up, the average life span of Americans was less than the age at which the program started providing benefits. We live so much longer and are so much healthier that it is insane to use the same rules as we did decades ago.
A 65 year old at the dawn of the Social Security program is equivalent to an 80 year old today. Put it another way: Do you think that when the program first started anyone would have supported benefits starting at age 50? Of course not, but that is the same liability that we are creating by not changing the current system.
If we simply ratchet the age up to meet current life expectancies we will create a system that meets its original intent and will be solvent forever at a fraction of the current tax rates. Let individual Americans and their families take care of the rest.
Can we do this immediately? No. But we can over the next fifteen years increase the age of eligibility for Social Security by one year per year, still meet our moral obligations, and pull this program back to what its authors had in mind.
