Monty over at the Ace of Spades just posted a link to a George Mason University working paper, The Truth About Entitlements. Monty’s summary:

SS and Medicaid are broken in principle. They cannot be “fixed” without fundamentally altering their basic design. It is morally wrong to continue as we are.

If we have a sane future, future generations will vilify the Democrats for blocking George Bush’s Social Security reforms when it would have been a lot easier to reform it. Social Security is a lie. The IOUs need to be paid back and future contributions need to be phased into a private system owned by the taxpayer who paid them. That’s the only way to keep the government from pretending that it’s some sort of savings plan for government programs at the same time that taxpayers pretend it’s some kind of savings plan for retirement.

There’s a good idea in the comments to Monty’s article, from “Josef K.”: For all practical purposes, Social Security is paid for out of general funds. Get rid of the dangerous fiction that it isn’t. And then start phasing people out. The commenter cuts off people under 40. If it helps to get it passed, I’ll say people under 47 so that it includes me. I already expect not to get anything from it; if making that official now helps us fix the problem now, then I’m all for it.

Moving Social Security from a special tax into the general income tax does two things. First, it removes the fiction that Social Security taxes are really contributions to a savings plan. This is important, because contributions to a savings plan need to return to the person making the contributions. Taxes don’t. Congress is treating Social Security like a tax—the money that the taxpayer expects just isn’t there.

It would also makes tax regulations that much easier for employers and, hopefully, make the sheer size of the tax more obvious. Social Security taxes don’t look as bad as they are today, because employers are required to pre-deduct half of the taxes from our wages. The number we see on our paychecks is only half of the actual taxes taken from us.

In fact, if there were one simple law that should be passed immediately, it would be to require employers to add their half of Social Security taxes onto our wages before they get taken out of our wages, so that we see the true cost on our paychecks.