Political backlash in 1983 was minimal because the first Boomers were still 27 years from retirement. Furthermore, AARP was not nearly as powerful 25 years ago as it is today.

Increasing the retirement age of Boomers is a much riskier proposition for politicians today. They're not going to do it until all other options have been exhausted. Means testing as a means of reducing social security liabilities is a much easier option for politicians, IMO.

If the US economy does badly over the next century, wage growth will be low and benefit growth will be low. If the US economy does well, wage growth will be higher and there will be more payroll tax to take from people in 2050. For various technical reasons, the offset isn't perfect, but the system is sustainable possibly with minor benefit cuts or tax increases.

If you want to argue that a defined contribution scheme would be even better, you can go ahead, but it is correct to point out that higher returns have to be traded off with higher volatility.

Will,

I thought you accepted social insurance arguments in principle. Here we have a defined benefit scheme with low administrative costs and widespread support from the payors/beneficiaries. If expected retirement income will be lower, that is a price most people are willing to pay to reduce risk. What's so terrible?

Just because a solution is easy to type into a blog comment doesn't mean it is easy to implement. Boomers nearing retirement are not going to vote for additional increases in the retirement age. Neither will they, nor the current retirees, vote for reduction in indexing.

Social Security is an annuity program. With the death of private, long-term pensions, they are the only guaranteed annuity stream most Americans have. Privatizers would like to turn it into a retirement savings program. Americans are by no means short of retirement savings options. They are worthwhile endeavors, but if anything, we need to be simplifying and consolidating the ones that are already out there. Transforming Social Security from one into the other is not only unnecessarily complicated and require far more administration than traditional SS ever has, but it also invites the SSA to function, effectively, as a sovereign wealth fund. This would not be a welcome development.

I'm curious as to your view of the stability of the Social Security Trust Fund, such that the stock market can tank and America's banks and lending houses can lose $1,000,000,000,000 in value on paper without having any effect on it. I know the Dow Jones ain't the home team, after all, but doesn't a crippled U.S. economy suggest that the future of Social Security might be poor, too? How is the national pension going to be a better investment than the nation it pensions off?