The deficit can be dealt with in several ways. 1) The federal government can finance it. 2) SS benefits can be cut. 3) SS taxes can be increased. 4) Massive immigration of young workers can increase the revenues. 5) The entire SS system is privatized, the transition financed by a national tax on land values.

Politically, the most likely way the system is put in balance will be a combination of the first three, the rate of increase in future benefits reduced by using the increase in consumer prices instead of wages as the index. A bad way to decrease benefits would be to tax social security income even more than it is now. Workers' wages are already taxed, and SS is supposed to be wages returned to workers at retirement, so taxing SS income is deeply unjust.

The second problem with Social Security is that it reduces savings and provides less retirement income than private accounts. To compare Social Security with a fully private account, consider a 20 year old man born in 1950 who will work for 45 years at $X per year, with a real net return on investments of Y percent. (The numbers assume zero inflation; with inflation, the numbers would just be higher, but the relative amounts would be the same.)

The Social Security calculator says he would get how much per year starting at age 65? (Enter 1/1/1950 for the date of birth, $X for annual income, 1/2015 for the retirement date, and use today's dollars.) The monthly benefit is what?, for an annual income of $how much?.

Now let's calculate putting 12 percent of the wage into a private account (I am taking out the portion of SS that pays for medicare). This includes the employee and employer portion of social security. With an income of $X per year, the monthly investment is $X/100. Assume a modest tax-free real rate of return on investment of Y% (with inflation subtracted out). On retirement, the investment would have grown to $how much?, which would be put into an immediate annuity.

(To calculate the amount, go to savings calculator and enter zero for the initial amount, X/100 for monthly savings, Y for interest rate, and 45 for term of investment.)

Now go to the annuity calculator. Use California for the state, 65 for the age, select the gender, and ignore the spouse settings. Enter the dollar amount obtained from the savings calculation. The result is a single lifetime income (with no beneficiaries) of $how much?, or $how much? per year.

The ratio of private to SS income is what?

Would private accounts would be much better for a worker just starting his career? Would private accounts are also better for the economy? Why?