Default is exactly what Cato is proposing. Apparently, government debt is slavery or something.

(OK, I know, it’s OK to pay the debt with the proceeds from selling aircraft carriers to private security firms. My bad for caricaturing your nuanced position.)

If you are worried about the capacity of the US Government to continue its existing mix of benefits and taxes into the future, I suggest you take the matter up with one George Walker Bush and his Republican Congress. I recall they made some decisions that have had an effect on this issue.

You left out the third and most likely possibility for continuing to pay SS benefits: more bond issues.

After all, Reagan taught us that deficits don’t matter.

No such obligations exist with SS. SS is a welfare program, not a contracted payment for services rendered. There is no contractual right of anybody to receive an SS benefit; the level of benefits is set by Congress and could legally be arbitrarily changed or abolished tomorrow.

You’re right that the notion of SS solvency is in a sense valueless if SS is (as it should be) considered part of a unitary federal government budget. But it is the case that the cost of SS as a share of GDP will grow in the future, and that because of the sheer size of SS this will put considerable pressure on the overall solvency of the government. In particular, after 2018– not 2042– there will need to be significant tax increases or spending cuts in some part of the government in order to continue paying SS benefits. This is the substantive core of the poorly-named “SS solvency crisis” and it remains true regardless of whether you think of SS as a separate entity or not.

If the trust fund “doesn’t exist,” which may or may not be true, I am all for getting rid of it altogether because it creates a feeling of security that should not be there.

So, are you in favor of the pit plan? why or why not?

My point about the debit card was just that saying that a transfer of money or a repudiation of debt is a “mere” financial or accounting change is silly.

What about your point that SS and the General Fund are both held by the same entity, the US Government? The same is true of a company pension plan (held in trust by the company) which owns company bonds. The one thing this does not do is give the company the moral or legal right to default on the bonds, which is roughly what Bush is proposing.

I’m not a trust-fund sceptic. However, trust fund sceptics have the difficulty that, if their ontology is correct, it is impossible for social security to be in fiscal crisis, or have a low rate of return, or have any of the other myriad of sins attributed to it. Those concepts just don’t make sense unless SS is taken to have an indpendent existence.

Aren’t promises more easily broken than financial contracts? Wouldn’t the pit plan be a net win from the point of view of libertarians, as well as borrow and spend Republicans, by reducing the number of actual physical claims on the government to pay?

Should we call it the Will Wilkinson Social Security Trust Fund Pit Plan?