The next great bailout: Social Security

Fortune's Allan Sloan takes a look at the troubled retirement program, why it's more important now than ever - and how lawmakers can repair it.
By Allan Sloan, senior editor at large
Last Updated: July 30, 2009: 4:13 PM ET

(Fortune Magazine) -- In Washington these days, the only topics of discussion seem to be how many trillions to throw at health care and the recession, and whom on Wall Street to pillory next. But watch out. Lurking just below the surface is a bailout candidate that may soon emerge like the great white shark in Jaws: Social Security.

Perhaps as early as this year, Social Security, at $680 billion the nation's biggest social program, will be transformed from an operation that's helped finance the rest of the government for 25 years into a cash drain that will need money from the Treasury. In other words, a bailout.

I've been writing about Social Security's problems for more than a decade, arguing that having the government borrow several trillion dollars to bail out Social Security so that it can pay its promised benefits would impose an intolerable burden on our public finances.

However, I've changed my mind about what "intolerable" means. With the government spending untold trillions to bail out incompetent banks, faddish mortgage borrowers, General Motors, Chrysler, AIG (AIG, Fortune 500), GMAC (GJM), and Wall Street, it should damn well bail out Social Security recipients too. But in a smart way.

Unlike the pigs feeding at Uncle Sam's trough, the people who qualify for Social Security old-age benefits -- the ones who'll benefit from the bailout -- have played by the rules and paid Social Security taxes for decades. It would be immoral to tell them, "Sorry, we have to trim your cost-of-living adjustment because we can't afford it," while expecting them to continue footing the bill for bailing out imprudent people and institutions.

Rest of the story:

http://money.cnn.com/2009/07/29/news...tune/index.htm