Were the federal government to account for its Social Security obligations under the rules of accrual accounting, which govern public companies, its financial outlook would be far worse. By the end of last year, the Social Security system owed retirees and current workers benefits valued at $14 trillion. The system's assets, in contrast, were only $3.5 trillion. These assets include not only the trust funds' current reserves ($1.4 trillion), but also the present value of the taxes that current workers will pay over the remainder of their working lives ($2.1 trillion).
... In other words, the system's current shortfall — its assets minus its liabilities — is $10.5 trillion. Unless Congress chooses to rescind Social Security benefits that have already been earned, this shortfall must be shouldered by future generations. This implicit debt of the Social Security system is more than two and a half times larger than the government's public debt.
What's more, the magnitude of the Social Security shortfall grew immensely last year. At the beginning of 2002, the trust fund's deficit was $10.1 trillion. Under a system of accrual accounting, Social Security would have had to report a loss of approximately $370 billion. If this figure — and not the trust fund's annual cash-flow surplus — were added to other federal accounts, the federal government would have reported a $930 billion deficit last week. Add in similar adjustments for Medicare and other retiree benefits, and the flow of red ink last year surges even higher.
If it's any comfort, most of the industrial world is supposedly in even worse shape.
If I were tyrant (clearly I'm not electable, so tyranny would be the only option :-) I'd be investing a great deal in research to slow the aging of the human brain. Were that to succeed I'd push the retirement age up in proportion to the therapeutic benefits. That might help in 20-40 years.
I'd strip benefits from employment, making it easier for people to move in and out of the workforce at any time of life.
I'd reform healthcare (yes, we do know how -- it's just that people don't like explicit rationing, they prefer their rationing to be hidden).
I'd raise taxes (yay, tyranny!) and fix the Bush economic disaster. (Clintonomics worked.)
Alas, I'm not tyrant!
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