For the first time since President Bush’s ill-fated effort to privatize Social Security five years ago, the future of the nation’s flagship retirement program is back on the policy agenda. For example, Social Security will almost certainly be an issue for President Obama’s deficit reduction commission. 

Unfortunately, we may be headed for the same non-productive shouting match we had over the Bush plan in 2005. Critics of the current system tell us Social Secrity is “broke” and faces trillions of dollars in unfunded liabilities. Supporters argue the program is untouchable.

I’d like to make the case for a middle-ground. Largely as result of profound demographic changes (we are living longer and having fewer children), the Social Security system needs to be reformed. It does not need to be blown up. But it does need to be updated.  

Social Security is in no way broke. But over the long-run it will be paying more in benefits than it collects in taxes. The result is, without changes in the system, government will be able to pay only about three-quarters of promised benefits to future retirees. 

This is an unhealthy situation and, on top of much greater financial stresses of both Medicare and Medicaid (which pays the largest share of long-term care costs in the U.S.), it jeopardizes the secure retirement of future generations.

It is important to keep in mind that the debate over Social Security is about benefits for future retirees, not current seniors. There is no chance that reforms will reduce promised Social Security benefits for those already retired or, indeed, even for those 55 or older. Whatever changes we make will be phased in slowly over many years. 

So what to do? My choice is a mix of modest Social Security payroll tax increases and benefit changes. I’d raise the cap on wages subject to the tax. I would gradually increase the early retirement age of 62. After all,as the nature of work changes and we remain healthy well into our 60s, many of us can and should work longer. I’d also adjust the inflation index to which benefits are tied.

I’d also consider other changes in the design of the program, perhaps even reducing benefits somewhat for younger retirees (especially those over a certain income) while raising them for those over 80 or 85 and for low-income workers and widows.

Finally, government needs to encourage younger generations to save more for their own old age. This means boosting participation in retirement plans. The CLASS Act, a new national voluntary long-term care insurance program included in the health reform law, will also help people prepare for the risk of needing personal assistance in old age.

There are many ways to address these issues, but the goal should be clear: At a time of budget contraints, Social Security benefits should be targeted to those who need them the most, even as we all do more to prepare ourselves for what we all hope will be a long old age.