Blahous and Greenstein favor different strategies to close the gap, but they agree on the reality of the problem and on the desirability of acting soon to fix it. Acting soon would yield several benefits, according to the authors:
Reductions in scheduled benefits and/or tax increases can be phased in gradually. The longer a solution is postponed, the more difficult it will be to restore solvency without imposing large, sudden reductions in benefits or increases in taxes.
More options will be available. Delaying action forecloses some options for restoring solvency and can produce less attractive distributional outcomes. For example, if Social Security tax increases were phased in soon, some or all current workers could contribute to restoring solvency. But if payroll tax increases are not implemented until 2037, the additional tax burden would fall entirely on younger workers still in the labor force after that date.
Beneficiaries and taxpayers will have more advance notice of changes and will be able to adjust their work, saving and retirement plans accordingly. For example, if scheduled Social Security benefits are to be reduced, people should receive ample warning so they can compensate by saving more or delaying their planned retirement.
Confidence in Social Security will be strengthened. If people do not believe that they can count on Social Security, the program will not be fully effective in serving as a basis for their retirement planning.
Strengthening Social Security’s finances could provide a modest early step toward closing the federal government’s long-run fiscal gap. Even if the changes were not scheduled to be fully effective for many years, their enactment would cause an immediate improvement in the long-run budget outlook.
Interesting white paper...