Our political leaders have known about the looming financial crisis for Social Security for decades, but never get it fixed. With the ratio of workers to retired people getting smaller and smaller as the Baby Boomers retire, it is only going to get worse. Should we just leave the problem for the next generation of voters? The Congressional Budget Office just estimated that the cost of our shortfall will be 4.4% on taxable wages–for the next 75 years (report). Wonder how our kids and grandkids will feel about that?
Being a conditional optimist, I think a window is opening up to fix this because we are entering a period of divided government with the Democratic takeover of the House of Representatives. Most members of Congress, most of the time, are motivated to claim credit and avoid blame. The realistic fixes for Social Security–raising payroll taxes, limiting benefits, raising the age of retirement, shifting to another funding mechanism–all involve being blamed for making some people unhappy. The neat thing about divided government is that you can divide the blame. We have a president who wants to do big things and a Congress that can neutralize the blame by dividing it–if not now, when is the next time we can save Social Security?