But how do you get the Baby Boomers to accept social security cuts? Especially when you consider that so many lost their retirements in the crash.
That’s the problem we face. Which one can you cut that will have the lowest numbers of people out in the streets in mobs?
Now, if there was a way to increase the federal payroll by a certain percentage that would basically initiate enough demand to completely restart the old consumer economy you might could balance that off with major entitlement cuts and then overtime, a reduction in the federal payroll as the private economy became more able to absorb the people.
The problem we have now is that there is 20% real unemployment and that number would be higher if you cut the federal payroll.
There might be an inventive solution. I actually think there is some equilibrium point in which you could increase federal employment to the point that it would put enough money back into the economy through consumption to bring back the private economy and you could do that while reducing the number of people who are on entitlements. Of course, the problem with that is both the right and left will attack it. The right for putting more people on the federal payroll and the left for kicking them off entitlements.
You phase in the changes just like they did in 1983 when they raised the retirment age from 65 to 67. I favor personal accounts with a smalled defined benefit program to cover survivor and disability benefits. You eliminate the government liability for the program. Over 30 countries have done exactly that including Chile and the UK. SS is the easiest entitlement program to solve.
There might be an inventive solution. I actually think there is some equilibrium point in which you could increase federal employment to the point that it would put enough money back into the economy through consumption to bring back the private economy and you could do that while reducing the number of people who are on entitlements.
Government is already too big. Obama is growing it even faster than Bush. When you increase government spending, you take money out of the private sector. The USG is already borrowing almost half of the money it spends.