Forecasts by GAO and others paint a much different picture. They show the cost of SS running about 4% of GDP for the foreseeable future. They also show in the long term, that once the boomers pass on that it will decline a little. OTOH-Medicare and medicaid have huge problems with forecasts showing them increasing from under 4% of GDP now to around 10% down the road. Without drastic changes, this means all govt spending at current tax rates will go to SS, medicare, medicaid and debt with a little left over for everything else. http://www.gao.gov/cghome/townhall092905/img18.html Seneca
I am not suggesting that social security is a ponzi scheme. But social security works on the premise young pay for the old and the employer kicks in a bunch as well. The hard part of the equation is how long will the baby boomers live? With advances in health care now and in the future its hard to say and will not be found in a actuary table. Also the age of retirement continues to be pushed back and pushed back. I can't collect until I believe 70 and a half. I haven't really checked, I am not counting on and if it is there when I retire great. I to think social security has some benefits especially for the lower end wage earners.
Obviously the system has to have periodic adjustments as demographics change over time. That's easily doable. I'm not a big fan of upping the retirement age as a solution to actuarial challenges. Would rather see us up contributions a tiny bit more. Medical care costs are the real problem!
Periodic adjustments is somewhat glossed over here. We are talking adjustments that will need to be ongoing for a generation or two. And the adjustments are a code word to significantly raise social security taxes on the employee and employer.