Advancing a Free Society

Social Security reform: 5 things every taxpayer needs to know before it’s too late

Monday, December 6, 2010

Interview of Charles Blahous by ConservativeHome’s Ryan Streeter

RS: What does every voter in America need to understand most about the current Social Security shortfall and why it has has gotten to this point?

Blahous: If there is one thing every voter needs to better understand, particularly every taxpayer -- and even more particularly every fiscally conservative taxpayer -- it's how further delay in repairing Social Security inevitably means bigger tax increases down the line.  This is partially because of demographics, and partially because of the wage-indexed benefit formula, but it's also because we have a pretty firm bipartisan consensus -- from the most conservative to the most liberal members of Congress -- not to cut benefits for those already receiving them.

This means that with each passing year, we have millions of additional baby boomers on the rolls whose benefits are politically inviolate.  It's then too late to pre-fund those benefits, and they're not open to renegotiation; they can only be financed by raising tax revenue.  The deck is thus really stacked against those who worry about the growth of taxpayer burdens. It's not so simple as saying, "I don't like this particular Social Security deal -- let's come back in 4-5 years and strike a better one."  4-5 years later, we're on the hook for much bigger tax burdens. Time is not our friend here.

Now, that's the main thing. But there are other issues that need to be better understood as well.  One is that the crafters of the 1983 Social Security reforms never intended to build up a big Trust Fund, nor did they believe that doing so would effectively fund future benefits; we've had a failure of national memory on this point.  Also, if we act now, future benefits don't need to decline in real terms.  But again, that's only if we act soon.  We'd benefit from broader understanding of all of these points.

Continue reading the interview at Conservative Home

(photo credit: Kurt Wagner)