Senate Majority Leader's Approach to Social Security: "Nightmare Scenario"

Dr. Charles Blahous, a Hoover research fellow who currently serves as one of the two public trustees for the Social Security and Medicare Programs, testified before the House Budget Committee this week that taking Senate Majority Leader Harry Reid's approach to Social Security would result in a "nightmare scenario" for the generation currently in the workforce. CHAIRMAN RYAN: "Can you specifically describe the effect of waiting to reform Social Security on those in and near retirement, and what effect that would have on future generations if we wait and address Social Security reform two decades from now [as Reid proposed]?" DR. BLAHOUS: "Sure... delay basically concentrates the effects of any adverse consequences on a shrinking number of people, so any particular generation is going to be harder hit the longer we delay. Now, waiting all the way until the 2030s is basically a nightmare scenario for younger generations, because you are completely exempting the baby boom generation, which is a historically large generation, from making any contribution to the [solution to the] problem." Blahous added that waiting that long would result in benefit reductions of up to a quarter, tax increases of up to one-third, or some combination of the two.