Because of the recession, payroll tax revenues have collapsed while benefits have kept increasing. This doesn't mean insolvency (yet), but it does mean that the massive cash flow problems we've heard about are here, ahead of schedule:
http://brucekrasting.blogspot.com/2010/06/social-security-at-mid-year.html
Helpful reminder, Gabriel, of financial stresses lurking beneath the headlines. Through this New Deal Program of Social Security, retired folks could quit relying on offspring for geriatric care. But when the elderly quit relying on them, the government began relying upon them for tax contributions, in this pay-as-you-go system.
How did social security become such a cornerstone of the welfare state? I thought it was originally designed to be supplemental income for retired people - am I right in my recollection?
There is a great article on the challenges of social security at Policy Review. The link is http://www.hoover.org/publications/policy-review/article/57976
I am Associate Professor of Economics and Chairman of the Department of Economics at Ave Maria University. I have been in the Economics Department since its beginning and have taught over fifteen different courses at Ave Maria University, particularly in the areas of macroeconomics, international economics, development economics, Catholic social teaching, economic history, and social philosophy. My two favorite courses to teach are Intermediate Macroeconomics and Markets, State, and Institutions.
My work is in the general area of international finance and open-economy macroeconomics, with a focus on developing countries. My dissertation focused on the 1999 economic collapse in Ecuador,using a combination of historical, theoretical, and empirical analyses. My paper on the role of deregulation, moral hazard, and overconfidence in the Ecuadorian financial crisis was published by the Cambridge Journal of Economics. Financial crises are a perennial topic, with causes that are complex and deep, inextricably intermingled with politics and ethics. My Ph.D. is from the University of Notre Dame.
Has anything changed in the last several months to complicate or clarifies the Social Security picture?