The Social Security trust fund should last until 2037. But the money in that fund is actually spent by the government to buy Treasury bonds. And when you think about it that way, the trust fund is more like a collection of IOUs the government has written to itself.
“A lot of people — because there is this large Social Security trust fund on paper — are tempted to believe that the financing problems are much further away than they actually are,” Blahous says.
In a book out next month, Social Security: The Unfinished Work, Blahous writes about what he calls “the mounting cost of delay” in dealing with the long-term solvency of Social Security.
It’s politically difficult to change or reduce benefits for people about to retire or who are already retired, Blahous argues. And with baby boomers reaching retirement age in droves, each year without reform excludes millions of Americans from reform.
On Social Security: Act Now, Save Later
Blahous says the government can ease the pain by enacting reforms that are very gradual — such as the Bowles-Simpson proposal to raise the retirement age from 67 to 69 over 48 years after 2020. “You can smooth out the changes so that any particular birth cohort or income group is not going to feel the changes terribly acutely,” he says.
The problem, he says, is that politicians have little incentive to enact changes that won’t be felt for 30 years. Link to Story here: