There are two types of problems confronting Social Security: accounting and economic. Most of the debate focuses on the accounting problem. This is seen in terms of discussion related to the "Trust Fund" and "bankruptcy" or "insolvency" of the Social Security Administration coming in 2032. Let me suggest that the accounting problem is the least of our worries. It is the accounting problem that has brought us to this "dance" of Social Security reform, but it is the economic problem that will make us pay.
Let me pose this question to focus my point. Wouldn't the accounting problem be solved very simply by the U.S. government just turning on the printing presses and paying Social Security benefits with the newly printed cash? Instead of worrying about when the SSA trust fund will go belly up, we'll say that the SSA has authority to call the government printing presses and have truckloads of cash sent over when that happens. Everybody gets what has been promised. Accounting problem solved. Of course, we'd still have the economic problem; we'd have inflation (hyperinflation), and those magnified numbers of dollars would be chasing around the same number of goods.
Some people have suggested that this the very thing that the politicians will do. Why? Because it will never make them take any hard positions (reduce benefits/raise taxes) that could get them into trouble with the voters. Of course, the country will go to hell in a handbag, but will people be smart enough to know where to pin the blame?
The economic problem is the piper that must be paid. The economic problem is the fact that fewer productive workers will be supporting a greater number of consuming retirees. Fewer workers will have to produce a lot more goods and services in order for us to sustain current standards of living. This is the true problem that must be addressed.
