Here’s a brief little bit of musing about Social Security that occurs to me once in a while. It’s a question for conservatives: what do you think will happen if we don’t agree to some kind of deal to make Social Security solvent?
Let’s game this out. Right now, the trustees say the trust fund will run dry in 2033. Let’s stipulate this for the sake of discussion. At that point, benefits will be cut 25 percent because payroll taxes alone won’t be enough to cover current benefit levels.
So imagine it’s 2033. The head of Social Security calls a press conference and announces that in July the trust fund will be depleted and benefits will be immediately cut. What happens next? The answer is pretty obvious, isn’t it? With tens of millions of seniors facing a whopping cut in their monthly checks, Congress will go into crisis mode and restore benefits. Period. There will be no cuts at all.
Does anyone seriously doubt this? I simply can’t imagine any other outcome.
Given this, conservatives have two choices. First, make a deal now that includes some benefit cuts and some tax hikes. Second, refuse to agree to any tax hikes and therefore scuttle any deal. Then, in 2033, like it or not, you’ll get a deal that includes no benefit cuts and enough tax hikes to finance Social Security just the way it is.
So why are liberals generally willing to cut a deal, even though they could just wait it out and not give up anything? And why are conservatives dead set against it, even though the lack of a deal will eventually spur tax hikes much larger than what they could agree to today? It’s sort of a mystery, isn’t it?
POSTSCRIPT: I am, of course, one of those liberals who’s in favor of a deal. Why? Because I think it’s worthwhile for young people to have faith that Social Security will be there for them when they retire. I think it’s generally good for the liberal project when the electorate believes that liberal programs are sustainable and well run. That’s why I’m willing to make a deal even though I probably don’t really have to.