Ten days ago, I wrote about the need to reform Social Security, citing the program’s terrible finances. Here’s a new video from Kite & Key showing the risks of doing nothing.
Sadly, doing nothing is exactly what both Donald Trump and Kamala Harris are proposing.n The video explains that this will mean automatic benefits cuts starting next decade, though I doubt that will happen. Politicians will panic and change the law.
But that won’t solve the problem.
Let’s go to Brian Riedl’s chart book, where we learn that Social Security revenues are stable, but the spending burden for the program is rapidly rising.
For what it is worth, there are only three ways of dealing with this problem.
- Massive tax increases, such as increasing the payroll tax rate, busting the wage-base cap, or raiding general revenue (meaning higher income tax rates, etc).
- Benefit reductions, either on current seniors (perhaps limiting cost-of-living adjustments) or future seniors (changing benefit formulas so they get less).
- Shifting to personal retirement accounts, which produces great results in the long run but involves a very significant “transition cost” as the new system is implemented.
Interestingly, several European nations have chosen option #3.
As well as other countries around the world. I’ve written about Australia, Chile, Switzerland, Hong Kong, Netherlands, the Faroe Islands, Denmark, Israel, and Sweden, all of which show that it is possible to fully or partially replace debt-based systems with savings-based systems.
P.S. If you want some jokes and cartoons about Social Security, click here. There are other Social Security cartoons here, here, here, and here. And a Social Security joke if you appreciate grim humor.
P.P.S. Eight years ago, I wrote an almost identical column, except it involved another Democrat and Trump.
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