In a recent New York Times piece, Peter Coy echoed the sentiments of some economists that only tax increases could fix the national budget. He’s right and he’s wrong. Simple arithmetic will tell you why. First, the need for taxes: A very large share of federal outlays is scheduled to go to current and near-term retirees, whose benefit levels already are well in excess of the taxes collected to pay for them. Unless Congress is willing to cut benefits on which people have become dependent, the near-term pressure will be mainly on tax increases. Second, the need for benefit cuts: The automatic rate of growth of health and retirement benefits scheduled in the law exceeds forever the rate of growth of national income and revenues. Those promises can’t be sustained no matter how much taxes are increased.
But… the Boomers paid in far more than the previous generation needed (to build the trust fund) and all dollars paid on Social Security go back into the economy (even as current workers accrue future benefits). Hard to see how Social Security beggars the nation. It’s a choice. It relieves the current generation of supporting their parents. The stock market is arguably more a Ponzi scheme than Social Security. With all due respect.