Friday, August 26, 2011

Entitlement Reform

John Hinderaker of the Power Line blog has written a thoughtful discussion of Social Security, what he calls the crown jewel of the entitlement structure. The main point he makes is that it is essentially a Ponzi scheme - workers' current contributions go to pay retirees' current pensions.

Raising the age at which benefits can be drawn will happen, if not now, soon. Given that people are staying healthy longer and able to work longer, doing this is reasonable.

On the other hand, means-testing the payouts turns Social Security into a welfare program, directed at helping the aged poor. Once this happens, public support for Social Security will plummet like a stone. Even though many will be poor when old, what young person anticipates this eventuality?