I agree with Gary M. Galles’s conclusion about the state of the Social Security trust fund:
It is time we realized that there is no fair way out from government Social Security commitments that exceed the funds available. A history of overpromises means everyone has a plausible fairness claim on their side. Yet something must give. The closest we can come to being fair is to avoid making any new over-commitments, to search for ways to make the program more sustainable (to reduce future unfairness problems), and to look seriously at the contentious issue of which of the options will minimize the adverse impacts of unfairness that cannot be avoided altogether.
and the urgency of reform in his post at American Institute for Economic Research although I suspect we agree on little else. What puzzles me about his analysis is that he doesn’t seem to recognize a simple reality: the Social Security program is suffering severely from a failure of its assumptions. I’ll just present one simple example of that here.
Median individual income in the United States in 1970 was around $8,740. Now it’s around $31,000. $8,740 is around $68,000 adjusted for inflation which, coincidentally, is right around the median household income. Nowadays the majority of households have more than a single income and many of the remainder consist of single women head of households. Additionally, today the majority of women work outside the home. Those are not the contours of the society envisioned by the framers of the Social Security program. Their assumptions have failed.
I should add that the phenomenon of people working at two or more full-time or near full-time jobs concurrently is another factor distorting policy.
I don’t know how Social Security should be reformed to suit it to the society we have now but I’m convinced that the present mismatch is part of our problem.
