A front page NYT story noted that Social Security benefit payments this year exceed its tax collections. As both the experts cited in the article pointed out, this fact makes absolutely no difference for the program since it holds more than $2.5 trillion in government bonds.
In spite of the statements by the experts cited in the article, the second paragraph told readers that this event marked: "an important threshold it was not expected to cross until at least 2016, according to the Congressional Budget Office." Nothing in the article or in the structure of the program suggests that there is any importance whatsoever to this threshold.
I quickly looked through the comments and will insist on imposing some arithmetic on this discussion. First, as a matter of logic, the Social Security surplus was spent in the same way that the money lent by anyone who buys a government bond is spent. This has absolutely nothing to do with the time of day -- people who own bonds expect to get their money repaid and the trust fund has every right to expect the bonds it holds to be repaid. Those who suggest otherwise are changing the rules after the fact and in effect implying that they want the government to default on its debt.
In terms of the tax burden we are imposing on the young, real wages on average are projected to rise on average by 45 percent at the point when the Social Security program is first projected to face a shortfall. This means that if we raised the Social Security tax by 6 full percentage points (way more than any projections show will be necessary), workers in 2044 will still have after tax wages that are on average more than 30 percent higher than what workers receive today.
The fearmongers like to focus exclusively on tax rates rather than after-tax income, which is the real determinant of living standards. If Bill Gates paid a tax rate of 99 percent, he would still have far more income that 99 percent of the U.S. population. This confusion of tax rates and living standards is really pernicious. In order to please the Peter Peterson crowd and the naive young people who think that he has their interests at heart, we should have a box on the tax form that will allow any worker to pay the same tax rate as their parents or grandparents (their choice). The only condition is that they will get the same before tax income as the people of the generation they select.
Hopefully, many young people will opt for these lower tax rates in their quest for generational equity. Then us old-timers will really be able to enjoy the good life.