The latest installment of the Wall Street Journal's online Econoblog feature has Arnold Kling (Econlog) and Max Sawicky (MaxSpeak, You Listen!) duking it out over Social Security reform. (I first noticed the link at Instapundit.)
One fairly common refrain from those opposed to the type of reforms being proposed by the administration is that there is no need at all to be rushed into solutions for a problem that will not arise for decades. Admittedly, the debate is often confused by mixing the question of policy imbalances with the desire to introduce private saving accounts, and by the use of emotion-laden (and overused) terms like "crisis." But I think Arnold makes a winning point on why the answer to "Reform when?" is "Right now."
We can either adjust our promises to a sustainable path or just "wait and see." If we "wait and see," then we make it more difficult for individuals to plan today. For example, former Clinton administration Treasury expert Brad DeLong recently suggested gradually raising the retirement age, which I think ought to be an option to put on the table. However, people in their late 40s and their early 50s need to know now if their retirement age is going to have to be raised. You cannot wait 15 years to spring the news on them.
Thus, even though there is no crisis today, there ought to be a sense of urgency about scaling back our promises to sustainable levels. Acting now would give people a reasonable planning horizon as well as assurance that the government is making commitments that it can keep, rather than false promises.
We might have to fund the shortfall after 2042 with general revenue, something completely feasible. About 2% of GDP (in 2042 and after) would fill the gap between payroll tax receipts and benefits presently scheduled for 2042 and after.
The "gap between payroll tax receipts and benefits" is presently scheduled for 2018, not 2042 (see the 2004 OASDI Trustees Report). And, as I've noted before, it is at that point that social security begins its shift to a transfer system paid out of general revenues.
I can't find my way to any reasonable argument to the contrary. By it's very nature, social security is a policy that operates directly on people's life-cycle decisions. Ideally, any reforms that are made would be in place before the generations primarily affected begin their effective economic lives. We know that some changes must be made -- let's just get on with it.
One point of order on Max's comments. He notes