If you regularly keep abreast of financial headlines, you: (1) apparently enjoy bad news, and (2) know it's a foregone conclusion that Social Security is doomed.
It's not a question of if but when the sky will fall. Retiring baby boomers will suck the Trust Fund dry in the next 25 years. The retirement benefits program that's served the nation since 1935 will be a quaint memory, like teenage boys who kept their underwear tucked inside their pants.
Well, that's one version.
Another, decidedly more positive view holds that the system needs only minor repairs. New spark plugs, a change of oil and off you go. This outlook comes from acknowledged experts, both UC Berkeley economics professors, so there may be hope.
The needed reforms are well known. It's just a matter of enacting them, say Ron Lee, director of the Center for Demography and Economics of Aging, and Alan J. Auerbach, director of the Burch Center on Tax Policy and Public Finance.
"I think we're likely to make relatively small changes in the parameters of our system that will make it sustainable," Lee said, without chuckling even once.
For starters, qualifying age for full benefits might be raised.
"In the 1930s," said Auerbach, "the normal retirement age was set at 65. It has slowly gone up to 67, but life expectancy during that period has gone up much more rapidly. It makes sense to base benefits on a higher retirement age."
Payroll taxes also
One way is simply to raise the tax rate, which now is 12.4 percent split between employer and employee. Lee said it could be done slowly and less painfully to accommodate increased payouts as needed. Another way is with gritted teeth -- about 4½ percent bump all at once -- which would eliminate concerns well into the future.
Of course, it also would enrage everyone hit by the hike.
"The sooner you do it," said Lee, "the smaller the ultimate increase has to be."
Yet another funding remedy is to eliminate the payroll tax cap -- only the first $106,800 of individual wages are subject to withholding now -- so high-income earners would pay more into the system, which coincidentally is how income tax works.
Finally, benefits could be adjusted, Auerbach said, making them "more sensitive to income levels." Or, paraphrased: Does a retiree with a yacht and a country club membership who lives off his bond portfolio really need a cost-of-living adjustment to his monthly check from Uncle Sam?
"It's not clear," said Auerbach, "why you need a program that continues to offer sizable social security benefits to high-income people."
This is where common sense collides with political reality. Policymakers want Social Security to retain support across all economic levels.
"If you cap the benefit level but uncap the payroll tax," Lee said, "the concern is people will feel it's more like a welfare program than a retirement savings program."
Both professors think the eventual tweaks will include a combination of all of the above.
"Changes like these, if you add them up, would easily fix the system," Auerbach said.
The math isn't the problem. It's politics that gums up the works.
Lee was asked how he would feel about Social Security's future if he were a 40-year-old wage earner looking into the future.
"I'd feel confident that it will be there in a form that isn't too different from the way it is now," he said.
He explained the widely held belief that the Trust Fund will be depleted by 2037 is an exaggeration. Even without changes in taxes, benefits or retirement age, Social Security will be able to pay 80 percent of benefits then and about 75 percent through the year 2100.
Moreover, he said, the U.S. will continue to have a relatively young population distribution -- and more taxable wage earners -- compared with industrial countries such as Japan, Germany, France, Spain, Italy and Sweden. Those countries, with far more generous national pension plans, are the ones that should be worrying.
Finally, Americans are more accustomed to working later in life than workers in most European countries, where fewer restrictions on early retirement pensions threaten sustainability.
"We don't have many of the problems other countries do," Lee said.
Said Auerbach: "Unlike many other things in our federal budget, Social Security is not beyond repair. We know what measures will work.
"In the case of Medicare, we're not so sure."
Oh, yeah. There is that.
Contact Tom Barnidge at email@example.com.