Will we ever solve Social Security?

For those that have already graduated in recent years as well as those that are still in school, we will face the likely prospect of a "bankrupt" Social Security system (if current trends are maintained). Technically, this is not completely true. The Social Security Trust Fund will be bankrupt, but the government will still continue to pay out benefits, but the funds would only come from payroll taxes. Thus, by 2042 (estimated projection), the government will only manage to provide 73% benefits. In 2078, it will drop down to 68%.

(Click here for detailed graphic)

At this stage, you may not realize that our 2008 presidential candidates - both Republican and Democratic - have not addressed the issue of Social Security and Medicare. The first time someone asked about Social Security was during the CNN/YouTube debate when New Mexico Gov. Bill Richardson deflected a question about handling the increasing costs of an aging boomer generation.

He said, "The best solution is a bipartisan effort to fix it." It is probably one of the best political answers I have ever heard. Of course, my other favorite was when presidential candidate George W. Bush Sr. responded with "Read my lips, no new taxes" slogan during his campaign.

So what is this bipartisan effort? Well, just do nothing. After President Bush's failed attempt to partially privatize this huge entitlement program, none of the candidates want to bring up the painful idea of cutting retirement benefits or raising taxes. Clearly, our politicians have abdicated their responsiblity in dealing with this problem. Perhaps they are just scared of the elderly vote.

Consider this as suggested by Newsweek:

From 2005 to 2030, the 65-and-over population will nearly double to 71 million; its share of the population will rise 20 percent from 12 percent. Social Security, Medicare, and Medicaid -- programs that serve older people -- already exceed 40 percent of the $2.7 trillion federal budget. By 2030, their share could hit 75 percent of the present budget (projected by CBO). Also, you may consider the fact that there are 3.3 workers per beneficiary today. By 2031, it will drop down to 2.1 per beneficiary.

Throw in the national interest, there will be very little left for the government to spend. If the federal government wants to maintain benefits to the elderly, then we would need to eliminate all defense spending, research, homeland security, the environment, etc. We would probably have to outsource our nation's security to Canada and Mexico.

So what are the solutions? President's Bush idea of partial privatization was one step to offer Social Security participants a chance to broaden their investments, so to speak. It was clearly not mandatory but Democrats played the fear card that the diversion of funds would hurt the program overall. Bush's lack of information on what funds would be used to replace the diverted funds also lead to the idea being discarded.

It would seem to me that Democrats just wants everyone to trust their government to provide all benefits. If you want to "choose" to change the way your benefits are set up, you are labeled as a conservative.

What else is there? Increase payroll taxes (FICA, Social Security) and eliminate the cap. Reduce retirement benefits. Change the cost of living adjustment calculation. Raise the retirement age.

Unfortunately, no one wants to consider these ideas. Besides all that, we must also consider the fundamental question of whether the current focus of Social Security and Medicare must be changed. Frankly, our country is not a retirement home. How can we function if three-fourths of what we take in goes to supporting the older population?

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Various think tanks concluded the following:

Liberals need to concede the idea of letting government growing too large and benefit cuts are needed.

Conservatives need to concede that tomorrow's government would be bigger than today's.

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The immense entitlement program could become a rift between the young to middle-aged worker population and the elderly. If it becomes a fact that we are being used to keep the old folks happy, expect a political revolt. It may bring about a strong young voter turnout that can make battle with the AARP and other lobbyist groups. It is inevitable. You got the elderly trying to enjoy their final years or decades and you got the young taking care of them plus their own children.

As for the current workers, we know that Social Security won't be "all there" when we retire. This is our best shot to having 401k's, IRA's, and other funds to minimize our burden.

The worse option would be implementing some of the ideas of Logan's Run.