For Social Security, the news from the program's Trustees' 2005 report that the program is now expected to become cash-flow negative in 2017 and will be also unable to sustain the currently promised level of benefits beyond 2041, both dates coming a year sooner than previously projected, is certainly not good. The good news in today's announcement, if it could be said to be so, is that retirement benefits will only need to be cut by 26% rather than the previously projected 27% at that time. Of course, that's very small comfort for anyone reasonably expecting to receive benefits past 2041.
Surprisingly, not everyone views this inability of the program to provide promised benefits as a problem. Here's an excerpt from the Associated Press report by Martin Crutsinger:
"Today's report confirms that the so-called Social Security crisis exists in only one place — the minds of Republicans," said Senate Democratic Leader Harry Reid of Nevada. "In reality, the program is on solid ground for decades to come."
Unsurprisingly, Senator Reid did not offer any suggestions of how to make up the missing 26% of promised benefits to today's younger workers who, for those born after 1960, would be the most affected demographic group. Mr. Reid also did not suggest when he would envision it would be appropriate for Congress to get around to reforming the Social Security retirement program.
All the more remarkable is that in postponing the reform of the program, Mr. Reid's inaction would only serve to make any future adjustment to sustain benefits at promised levels more draconian in nature. Since Mr. Reid and his fellow Democrats are ardently opposed to the various proposed Personal Retirement Account (PRA) options, this would suggest that the Democrats are either willing to substantially hike payroll tax rates and the level of taxable income to make up the expected deficit, or are otherwise planning to cement the retirement of today's workers at a permanently reduced level of benefits. In either case, the expected losers are not the President or the Republicans, as Mr. Reid would prefer, but the working people of the United States, who he claims to represent.
Update: Alarmingly, much of what I've commented upon has been agreed with by the editorial board of the Washington Post, who place this event in larger context.
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