My alternative solution

O.k., I'll speak for myself. My alternative to private accounts: wait. Do nothing now (o.k., maybe a couple of small changes to the system), take serious action when and if the Social Security system truly runs into solvency problems. My reasoning:



1. For the time being, and for the next 10-20 years, the Social Security system is arguably the most solvent portion of the federal government's budget. Social Security currently takes in around $250 billion more than it takes out every year; the rest of the budget is about $675 billion in the red (these are projected 2005 figures from the Economic Report of the President 2005). If we're worried about government finances, Social Security is probably the last place we should be looking at right now.



2. Sure, the actuaries predict that the Social Security system will be in financial trouble beginning in about 20 years. But their prediction is based on assumptions about economic growth and other variables about which economists have very little knowledge. The SSA predictions have been wrong in the past (in recent years, they have been consistently too pessimistic about the state of Social Security's finances).



3. There's no real advantage to tackling the Social Security problem now rather than later. When push comes to shove, if the official predictions are right, some time in the next 20-40 years there will have to be tax increases or benefit cuts to restore solvency to the Social Security system. But imposing those changes now does no one any good. And if we impose big tax increases or benefit cuts now and it turns out that there is no solvency crisis, then we have caused needless harm to workers and beneficiaries.



4. Having said all that, a couple of steps might be prudent (though not urgent). We could index the retirement age to life expectancy, and we could raise the cap on income subject to the Social Security tax. These things wouldn't do a lot to change the financial picture, but seem to make some sense.



5. Let's shift our focus to the real problems facing this country. If you want to worry about a financial crisis that's hitting us right now that severely impacts federal government finances, do something about health care. If you want to worry about a doomsday scenario about to unfold sometime in the mid-21st century, do something about global warming. Social Security ought to be, literally, the least of our worries right now.