…over the next 75 years, about 17% of scheduled benefits are currently unfinanced. [Charles] Blahous estimates that the U.S. could cover that gap if the Social Security payroll tax were raised from 12.4% to 15.1%.
Now, you might have strong views about the wisdom of that kind of tax increase, but you should acknowledge that this is a very different reality than a bankrupt system. With Social Security on full cruise control, and with no forward-looking reforms, today’s younger earners still are slated to receive more than their parents did — just not very much more.
Dean Baker, an economist to the left of Blahous, also has studied Social Security. He estimates that retirees 30 to 40 years from now will receive monthly checks that are about 10% higher in real terms than today’s benefits. And keep in mind those are estimates per year. To the extent life expectancy rises, total benefits received will be higher yet.
To be clear: It may well be a bad thing when the Social Security trust fund is depleted, and Social Security is financed fully from current government revenues. …
I’m not saying everything will be fine in the future. The U.S. is vastly underperforming relative to its potential. But the claim that post-boomer generations will be left holding the bag, through a bankrupt Social Security system, just doesn’t add up.
A more interesting issue than the future of Social Security is whether we can imagine and implement a better and more solidarity-focused system of social welfare than we have today. I think that would look a lot more like what some European nations are experimenting with, nations like Hungary and Italy. And I wonder whether a new social welfare system would help encourage more Americans to see themselves more as the authors of their own destiny, supported and upheld by their neighbors, than as victims of circumstance amidst a frothy global economy, recipients of abstracted but desperately necessary national benefits.