With the deficit being the number one issue in the national news, there is actually some talk of cutting Social Security benefits (thanks to Scott for the link). The first plan in cutting Social Security costs is to change how the government determines the cost of living adjustment.
Many libertarians already believe that the consumer price index (CPI) is understated. It is difficult to say because it is impossible to measure overall prices. People consume different things in different amounts, so price inflation will vary from person to person. In addition, it is always hard to take into account the changes in quantity and quality of a product. Obviously a computer or television that is made today is far superior to that of 10 years ago, but how can we measure this?
The definition of inflation used to be an increase in the money supply. This was changed by the advocates of big government. When most people talk about inflation today, they are talking about prices. Price increases are actually a result of inflation (an increase in the money supply). By changing the definition, it allows the political hacks to blame other things for increasing prices. They can blame greedy businessmen and high oil prices.
If we really want an accurate adjustment for Social Security, how about we use the adjusted monetary base for the cost of living adjustment? Of course, that would mean that Social Security recipients would receive triple the amount that they were receiving just 3 years ago. The government would already be bankrupt or we would have hyperinflation.
This talk of cutting Social Security does not surprise me (and yes, it would be cutting). While I don't want to see more monetary inflation, I think it is appropriate to start cutting these entitlement benefits. The age to collect should also be raised and I'm sure that will be coming in the matter of a few years.
As a libertarian, I believe the whole Social Security program is a Ponzi scheme. Why should senior citizens be living at the expense of younger people? Yes, they were forced to pay into the program, but that still isn't a reason to force the younger generation to pay. If person A steals money from person B and person A is not longer around, it doesn't make it right for person B to then steal money from person C.
Although the younger generation does not vote like their elders, the non-retirees of this country still have the numbers. It was once politically suicidal to speak anything of cutting entitlement benefits for senior citizens. It is no longer taboo. As the debt gets worse and the dollar loses more value, the government will have to start cutting its spending. If the younger generation has a choice between longer work hours and higher taxes or a huge cut in Social Security payments for seniors, which do you think they will choose?
Again, it is not the obligation of the younger generation to provide for the older generation. It should be voluntary. The younger generation should not be forced to pay for other people to retire while they struggle to pay their own bills.
The government is very slowly defaulting. It defaults every time it prints money. What was once political taboo, is now openly talked about. The idea of cutting Social Security is finally out there. The politicians are lying (what else is new) in trying to imply that the inflation adjustment is overstated. But regardless of the rhetoric, Social Security is no longer off the table.
We should continue to expect more of this as time goes on. The senior citizens of the U.S. will learn the lesson that the Greeks are learning. There is no such thing as a free lunch. And if you try to take someone else's lunch, you always run the risk of a revolt.