The comments to the last post contain a thread, spilling over from AngryBear, about whether Dean or I favor default on some part of the government's obligations. I don't favor default on securities issued by the federal government. I didn't bring this up--it shouldn't even be a question.
But Social Security is not a security issued by the federal government. It is a program that current generations legislate on their own behalf and largely at future generations' expense. It is not the only such program. I think all such programs need to be carefully considered, and in particular, that we should tread very lightly on future generations' income when the proceeds go for our own consumption, not for investments that increase the size of the economy they will inherit. That attitude applies to Social Security, to Medicare, and to the level of federal debt.
I admit that I applied it first and most attentively to Social Security. I have been studying the program since 1988. The current debate about Social Security was beginning at that time. Medicare was smaller. Over the subsequent years, there appeared to be some hope for the federal debt to brought to a manageable level. But if you read the two things I wish that Bernanke would have said in his testimony in the previous post, I am acknowledging that there is no difference in how I would apply this attitude today. And it's the past six years that have done it.
I wouldn't characterize anything I've suggested at any point as a default on Social Security. I do want to scale the program back to what can be afforded in the long term (as I have defined both "afforded" and "long term") with roughly the same payroll tax rate on future generations as we've paid. I have been clear about what I would do if I could implement my own preferences and what I would do if I had to compromise with others who don't share my preferences. If those two options are not on the table, then I tend to side with changes to the program that keep the program--and its impact on future generations of workers--small rather than large. So, perhaps to PGL's disappointment, I would take the President's plan (Commission Model #2, possibly updated to Progressive Price Indexing, and with the carveout personal accounts, which I don't view as necessary in this plan) over the status quo, even though I think we can do better.
But that's really not the issue here. In his post, Dean said that "workers have already paid for these benefits" and "if benefits are cut at a point where the program could easily afford the benefits (e.g., 10-20 years), then the government has effectively stolen from the people who paid Social Security taxes." He equated that with defaulting on the bonds in the trust fund. Others have appropriately argued that the two are not the same thing. I argued that I don't buy his appeal to morality to preserve benefits for current workers at the level in current law, largely because the balance in the trust fund that he's using to make his case doesn't actually represent savings that those workers have amassed to help future generations afford the scheduled benefits.
UPDATE: Felix Salmon has a nice roundup of the blogosphere's discussion of this issue.