also: Solvency, Sustainable Solvency
Okay lets start with the following from CBO:
What we have here is the standard picture of Social Security 'crisis'. We have one line labeled 'Outlays' and then 'Outlays with Scheduled Benefits' going from lower left to upper right. We have another line called 'Tax Revenues' that later merges with 'Outlays with Payable Benefits'. In the left hand 'actual' section of the figure we see 'Tax Revenues' crossing with 'Outlays' back in 2009. At this point the gap between tax revenues and outlays was back filled from the existing Trust Fund, first in the form of interest and then increasingly by redemption of Special Issue Treasuries until the latter (and of course all interest accruing on them) are depleted, an event currently projected for around 2033. At which time under current law 'Outlays' simply reset to match 'Tax Revenues' and benefits move from 'Scheduled' to 'Payable' via a 25% cut in benefits. This is the standard definition of 'Crisis'.
Up to this point both 'Defenders' and 'Reformers' are on the same page. But views and definitions depart radically after, because both sides take very different lessons and policy prescriptions away from the same 'Crisis'. To turn to those figurative pages follow me below the Thingy.
Switching gears let us consider the definition of 'Solvency'. Social Security is considered 'solvent' if and only if it has income and assets projected to pay all scheduled benefits plus leaving a minimum mandated reserve at year end. If this solvency condition is projected to continue in each year of the following nine then Social Security meets the definition of 'Short Term Actuarial Balance'. Similarly projected solvency over 75 years meets the definition of 'Long Term Actuarial Balance'. Some folks, including Chief Actuary of Social Security Steve Goss, would impose even further tests with Goss proposing 'Sustainable Solvency' defined as a Trust Fund not only with a mandated minimum reserve in year 75 but a series of year end balances trending up.
So 'Solvency' is inextricably tied to 'Scheduled Benefits'. On the other hand the formula that determines 'Scheduled Benefits' is not fixed in stone, Congress can change it at any time. Meaning that Congress simply by changing the formula can reset Solvency right to any level it wants, including the level represented by 'Tax Revenues'/'Payable benefits'. Boom! make 'Payable' the new baseline for 'Scheduled' and Social Security is 'Solvent'.
And that is exactly the way 'Reformers' propose to 'Fix' the 'Crisis'. And to introduce some more terms to 'Preserve' and 'Strengthen' Social Security. See! Look!! It's 'Solvent'!!!
And using 'literally' literally they are not wrong in doing so. And equally they can at the same time establish Short Term and Long Term Actuarial Balance and by jiggering the benefit formula enough Sustainable Solvency as well.
Meaning that 'Solvency' is not the hill that Defenders should pick to die on. Instead we need to make the case that the CURRENT schedule represents the MINIMUM acceptable benefit level, or indeed go with Atrios/Duncan Black and argue forthright that those benefits should be INCREASED. But that requires taking off the green eyeshades that would have any 'balanced' outcome be a 'fix' and split the difference in the above figure via a combination of revenue boosts and 'minor' 'tweaks' like Chained-CPI. On the grounds that that too would deliver 'Solvency'. (Even if by way of the Catfood aisle).
On the flip side Defenders need to beware of 'fixes' whose justifications depend on the ease of establishing 'solvency' on the revenue side via such things as cap increases. Because in doing so we are making an implicit, silent claim that the current schedule formula is somehow sacrosanct. For one thing we risk losing the Atrios argument for INCREASING benefits. That is we need to move away from accounting/bookkeeping based arguments and go right to Equity. That is the real issue is not about balancing books but in maintaining and if possible increasing dignity and comfort for retirees. And for that matter their survivors. And disabled workers.
Eyes on the Prize. And the name of that prize isn't 'Solvency'. Because there are paths to that that are no prize at all.