Writing in The Hill, Brenton Smith asks what I think is an important question: “What should Social Security do?”
Depending upon which part of the debate about Social Security reform that you follow, the program is either welfare, forced savings, or old-age insurance. We pay for the benefits with revenue that is either called taxes or insurance premiums. The program contributes to our deficit, depending upon what definition of deficit is used.
We should be asking what Social Security should do before we look for ways to pay for what it is doing. Andrew Biggs notes in his article in National Review, "Social Security needs a new paradigm for how individuals and government programs contribute to retirement security."
He argues that Social Security needs a new charter, poverty prevention. Biggs provides ample evidence that Social Security is horribly inefficient at poverty prevention. His solution would replace the purpose of Social Security which is old-age insurance with a basic income payment.
If you want Social Security to serve as a program to end poverty in the elderly, the answer is simple. Just end the program, and transfer the resources to a program such as the Supplemental Security Income program that actually serves to eliminate of poverty, probably better than Social Security ever will.
While I don’t think the solution Smith suggests in his final paragraph is feasible – a strong means-tested guarantee against poverty in retirement probably requires forced saving, as in Australia – I strongly endorse Smith’s argument that we think about what we want Social Security to accomplish before we start on the technical changes needed to get Social Security to long-term solvency.