The trust fund will keep Social Security solvent for decades. Whats the hurry?
The trust fund will keep Social Security solvent-on paper. But it cannot delay the need for tax increases or spending cuts by a day or reduce them by a dollar. The reason: the trust fund holds special-issue government bonds (really just IOUs), and when Social Security redeems them the government will have to raise taxes or cut other spending to produce the needed cash. For example, in 2027 Social Security will run a payroll tax deficit of $200 billion (in today’s dollars). If we didn’t have a trust fund, we’d need to raise taxes or cut other spending by $200 billion. But we do have a trust fund. Yet to repay the fund’s bonds, we still need to raise taxes, borrow, or cut other spending by $200 billion. Besides, the person who will retire in 2041 is a 31-year-old worker today. If we give young workers the choice of putting some of their taxes in personal accounts now, they will have the opportunity to begin accumulating money for their retirement. Those funds will mean that they will rec
