Arnold Kling, the proprietor of EconLog, discusses an argument made by economists Jagadeesh Gokhale (of the Cato Institute) and Kent Smetters (from Wharton) on the wisdom (or lack thereof) of returning social insurance programs (like Medicare and Social Security) to pay-as-you-go status. (The article appeared on the editorial page of Friday's Wall Street Journal.)
In essence, Gokhale and Smetters are claiming that pay-as-you-go does not work because it doesn't solve the problem of paying for the very large implicit liability associated with future benefits to be paid under current policy. As a result, pay-as-you-go proposals do nothing to resolve the very large tax burdens that will be required of future generations to pay for those promised benefits.
(Full disclosure: I think Gokhale and Smetters are really smart thinkers on these issues. Both, however, are friends and co-authors of mine, so I am predisposed to admire their impeccable judgement.)