Walking: Social Security (3)

Over on Brad's World, Brad Shuler expresses skepticism about some of the plans being discussed for private savings accounts as a reform for Social Security. I agree with Brad's assessment that these plans seem to assume it's okay to rack up additional deficits in order to get people off of Social Security. The basic premise seems to involve a two-pronged approach to the problem:

1. Get people off of Social Security - this is generally via private accounts
2. Cover the future shortfall for Social Security (due to all those people not paying into it any more) by deficit spending

I think it may be possible to avoid the deficit spending if we reduce benefits in some minor ways. For example, if we change things so you begin receiving Social Security 10 years prior to your life expectancy (instead of at age 65), it would greatly reduce the Social Security shortfall for the future. No one seems to be talking about this though, probably because they don't want some retiree advocacy group to drop a cluster bomb on them...

Even more troubling are the recommendations in some of the plans to tie increases in Social Security benefits to cost-of-living increases instead of wage increases. At first, this seemed like a reasonable idea to me. Then I read an article (which I now can't find) which pointed out the problem: if the creator's of Social Security had tied increases in benefits to cost-of-living instead of wage increases, Social Security today would not provide enough money for its recipients to have electricity or a telephone. Yes, it's true. Most people had neither when Social Security was formed. And a cost-of-living index would not have adjusted for the change in living standards that has occurred in the last 70 years. Imagine living without electricity or a phone today, and you can see why a cost-of-living metric is a built-in problem for the future.