I’ve thought about this several times, so it was enjoyable to read the following–and realize that I’m not the only one who thinks this way:
If a debt cannot be paid, it will not be paid—at least not paid in full. In dealing with such debts, the fundamental logic is to settle unpayable debts at a discount, at less than 100 cents on the dollar.
True enough. This is the same approach that a grocery store uses when it marks down the veggies when they are no longer fresh. Something is generally better than nothing when it comes to an investment.
Against the $34.5 trillion in OASI assets, there are liabilities of $41.4 trillion. This is the present value of all the future cash outflows promised by Social Security. The liabilities are obviously $6.9 trillion greater than the assets. If your liabilities exceed your assets, you are by definition insolvent—and your creditors have reason to think about how they might wish to deal with that.
Putting these numbers together, the $34.5 trillion in assets of Social Security available to pay promised pensions are only about 83 percent of the promises of $41.4 trillion. Since the assets are equal to about 83 percent of the liabilities, this gives us a reasonable estimate of the fair way to settle the debt of Social Security to its creditors (namely, us): 83 cents on the dollar.
Allow me to say that I would be willing to go even further. Considering that I do not expect to get a dime from SS as it is currently structured, I would even be willing to receive 30 cents on the dollar (what I might get on bad debt which has gone to a collection agency).
Either we drop the girl in the volcano, or the whole village gets wiped out.