Private account opponents are becoming annoyingly glib about the real financing issues that Social Security faces, which is only going to make it harder to muster the political will that we’re going to need to alleviate the shortfall (either now or down the road). So I was happy to see Jeff Madrick offer an intellectually honest take on the problem in Salon:

[T]here are genuine concerns. For years now, baby boomers and others have been paying more in payroll taxes than has been needed to meet the needs of retirees. The federal government has of course spent the surplus, but it has placed Treasury bonds in a trust fund to be paid off when needed. And needed they may well be around 2018 when, as the president noted, Social Security payments will begin to exceed the payroll taxes collected.

Will the bonds be paid off? Of course they will. The Treasury will not renege on its obligations. But there will also be pressures on the budget, and Democrats are too flippant about this. If the nation is still in deficit, other programs may have to be cut or the Treasury may have to borrow more in the financial markets.

When the trust fund is eventually run down — the Social Security Administration estimates that will happen around 2042, but some think it won’t happen until the 2050s — the system, based on current projections, will surely need new sources of revenues or cuts in benefits paid.

The problem is not so much the projected date of trust fund insolvency — a highly uncertain projection — but the increasing strain on the federal budget once Social Security moves into deficit and begins to redeem the Treasury bonds it has accumulated. Medicare’s rapidly increasing costs and the general fund deficit are bigger problems, but Social Security’s funding gap is a significant concern (and one that private accounts do nothing to solve). Good for Madrick.