We are at the beginning of a substantial and permanent shift in the age distribution of our population. This shift was caused by the drop in birth rates from the long-time average level of about three children per woman through 1965, to just two children per woman since 1975. By 2040, there will be only two workers for every OASDI [Old Age, Survivors and Disability Insurance] beneficiary, down from three workers per beneficiary throughout the period 1975 through 2008. As a result, the cost of Social Security will shift from about 4.5 percent of GDP to a stable level of 6 percent of GDP [Gross Domestic Product] by 2040. Currently scheduled tax revenue will remain at about 4.5 percent of GDP. Making Social Security solvency sustainable will therefore require a choice to:
- Increase revenue by 33 percent after 2035,
- Reduce benefits by 25 percent after 2035, or
- Enact some combination of these changes
In the absence of legislation, the combined OASDI Trust Fund reserves are projected to become exhausted in 2036, with only 75 percent of presently scheduled benefits payable thereafter through 2085.Note that people living longer isn't the problem. It's women having fewer children. I suppose that Republican plans to make it more difficult to obtain contraceptives would do something about that.
Goss listed the various proposals for dealing with the situation -- apart from making it more difficult to obtain contraception. My favorite is to lift the cap on the Social Security tax so that it covers all wages. It's simple. It takes care of the problem. It raises taxes only on those most able to bear the tax increase. Most people will be unaffected.