The Social Security scare story is a long established Washington ritual. Bloomberg news decided to bring it out again in time for Halloween. The basic story is that the Social Security trust fund is projected to face a shortfall in less than two decades. This means that unless Congress appropriates additional revenue, the program is projected to only be able to pay a bit more than 80 percent of scheduled benefits.
This much is not really in dispute. The question is how much should we be worried about this projected shortfall and what should we do about it. Bloomberg’s answer to the first question is that we should be very worried. It goes through the list of potential fixes and implies that all would be difficult or impossible.
I will just take one potential fix, which is raising the payroll tax by 2.58 percentage points to cover the projected shortfall. Bloomberg tells us:
“…it’s doubtful that the American public would accept such jarring changes.”
– Center for Economic and Policy Research