Sunday, June 9, 2013

Want to Fix Social Security? Use the Right Wrench

SOCIAL SECURITY is expected to run out of reserves by 2033 — a mere 20 years from now. With the public apparently opposed both to tax increases and to benefit cuts, the main politically feasible way to avoid such a fate seems to involve some monkeying with obscure aspects of the definition of benefits.

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  1. The idea here is to replace an adjustment which protects buying power with an adjustment that floats on the business cycle. This is an unusual idea coming from someone who fame is derived from predicting bubbles.

    This doesn't fix Social Security though. There is a 23 trillion dollar shortfall and pecking around at how benefits grow really ignores the bigger problem.

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