The political struggle over the future of Social Security will be fierce. The truth is Social Security is not in a crisis. Under the worst case scenario, the existing Social Security program will be there when today s younger workers reach retirement age. The latest projections show that the Social Security Trust Fund will be able to pay 100 percent of benefits on time for the next 37 years. However, starting in 2038, the revenues of the Trust Fund gradually will be depleted and tax revenue from the payroll tax, at current rates, will cover only about 75 percent of payments owed to beneficiaries.
Privatization is a radical scheme to solve a modest problem.
All that is needed is to figure out how to close the gap between paying 75 percent of guaranteed benefits and 100 percent of guaranteed benefits after 2038. That can be done without radical changes to the program. Moving to a system that includes private investment accounts would require massive tax increases, raising the retirement age and cutting benefits because it would cost trillions of dollars to cover transition costs. These extra trillions of dollars would be needed in order to continue to pay benefits to current retirees while creating new accounts for today s workers. There are many options to strengthen the Social Security program which will not hurt beneficiaries and working families.