Bloomberg had a rather alarmist article by Kevin Hassett today titled Recession Bites Into Social Security’s Surplus. While Hassett’s objectivity is questionable, the article is rather interesting. It’s an easy read on a rather uncomfortable subject.

Criminals know that people who are distracted might forget to keep an eye on their valuables. It’s just happened to us as a nation.

We have all been so busy whining about bonuses at American International Group Inc. and arguing about the so-called card-check legislation that we forgot to watch the Social Security surplus. While we were looking away, that surplus disappeared, eight years ahead of schedule.

The picture he paints is rather bleak. He’s certainly more pessimistic than others (including the CBO) about the future of Social Security, but his proposal is difficult to argue with:

The only responsible course is to do what reformers have been advocating for at least a decade, a step that worked in 1983: Establish a bipartisan commission to recommend fixes to Social Security, and implement them now. The myth that we can postpone reform because everything is just fine has been exposed as such. The time to act is now.

Heh. Check that link. I’m not sure I’d go about advocating anything associated with Alan Greenspan right now (regardless of the actual effectiveness of the commission). Still, it’s a reasonable position to argue that we should make smaller changes now rather than big changes later (though I think Hassett is actually arguing that we need to make big changes now … I’ll conveniently tone that down). For a decidedly less concerned perspective, read this post on Angry Bear.

The Angry Bear post makes a good point: the situation is dynamic, and hitting a deficit now doesn’t actually mean that we’ll sustain a deficit until 2017. When we recover from this recession (whenever that will be), Social Security taxes will pick back up.

I do have a concern with that, though. This recession might last longer than we expect, and there’s a chance we’ll have a double-dip recession. We might have anemic growth coming out of this. To simply discard those possibilities seems reckless. Whether we actually allocate resources for pessimistic scenarios is a separate question from whether we should actually look at the consequences of pessimistic scenarios. The forecasts seem rather rosy. We don’t need to be as pessimistic as this, but we could at least try to look at the scenarios offered by some of the more vocal, respected pessimists (Krugman or Roubini).