The scholars at the Mercatus Center have some suggestions. They’ve issued a new white paper discussing the various qualities a successful reform of Social Security would have.
According to recent data from the Congressional Budget Office, Social Security (along with Medicare and Medicaid) spending will account for half of the federal budget by 2036. That’s over half of the money spent at the federal level to pay for direct benefits instead of core government services.
If Americans want a government that governs, something has to give.
The report charts a path for reform based on spending reductions over increases in taxes:
Any discussion involving entitlement reform must first overcome the miscon- ception that it is possible to close these programs’ funding shortfalls mainly by rais- ing taxes. The Congressional Budget Office (CBO) estimates that federal tax rates would have to more than double to address currently projected spending increases.1 Such high tax rates would have devastating economic effects. Even taking the per- spective of those who might prefer to raise taxes substantially rather than to cut sig- nificantly into entitlement cost growth, we see clearly that relying on tax increases alone would represent an ineffective and economically crippling approach to this policy challenge.
One of the authors of the study–Charles Blahous–is one of the two public trustees of Social Security and Medicare. He is ringing the alarm bell from the inside. The question is whether the American public will demand anyone listen.