An objective analysis of the Social Security system concludes that by 2033 the surplus of $2.7 trillion will run out and beneficiaries can expect to see payments cut by 25 percent as the program becomes wholly dependent on tax revenues.
This is not a new problem. Elected leaders have known for years that without changes Social Security cannot be sustained long term. Not too many things are more important for American citizens than knowing whether they can count on the government retirement program to supplement personal savings and sustain them in retirement.
For many, Social Security will be the only retirement safety net, or at least form the bulk of it. Currently, about one-quarter of married couples and just under half of single retirees rely on Social Security for 90 percent or more of their income, according to the Social Security Administration.
Yet discussions about how to assure the long-term viability of the retirement program are largely absent from the presidential race and from most Senate and House contests. The reason, of course, is politics. Shoring up Social Security will mean making hard choices. Candidates conclude voters want to her pabulum rather than honest policy proposals.
The longer the nation puts off these choices, the more difficult they will become, with less time to get the system caught up.
Democrats have been more eager to talk about the issue of late. That's because they see an opportunity in attacking proposals offered by Wisconsin Rep. Paul Ryan, the man Mitt Romney picked to be his Republican vice presidential running mate.
In his 2010 "Road Map for America's Future," Rep. Ryan proposed allowing younger workers to divert one-third of their social security taxes into private accounts.
This was a bad idea when President George W. Bush proposed it in 2005 and it is a worse idea now, the experience of the 2008 crash showing what market volatility can do to private investments. Social Security should be a rock solid promise of money that future retirees can count on. It is enough that 401(k) retirement plans are vulnerable to the vagaries of the markets.
It is understandable why Democrats want to run against Ryan's "privatize Social Security" plan. Unfortunately, they offer no alternative, at least at the top of the ticket. In this campaign, unlike the last, President Obama has not said how he would go about fixing Social Security.
Candidate Obama had a viable idea when running in 2008. The Social Security Administration now imposes a tax on the first $110,100 of a worker's wages, a number that increases annually with inflation. In 2008 the president proposed increasing that cap to $250,000. Workers and their employers split the 12.4 percent tax, each paying half. A recent Associated Press analysis found that increasing taxes in such a manner would have the biggest impact on closing the funding gap, far more than raising the age of eligibility to collect Social Security. Boosting the cap to $200,000, for example, would eliminate 72 percent of the shortfall.
But the president has calculated that talking about Social Security payroll tax increases this time would be politically dangerous, particularly given that Mr. Romney is sticking to the GOP pledge of no new taxes. Mr. Romney's plan, such as it is, calls for gradually increasing the retirement age (impractical for many with physically difficult jobs) and slowing the growth of benefits paid to those in higher incomes. He offers no specifics.
The solution is likely some combination of tax increases, increasing the retirement age modestly and reducing payments to the well off. But given the lack of any debate pre-election we don't hold out much expectation the politicians will compromise to fix it post-election.