That’s the real issue behind the Social Security debate – and the deficit fight as well. But it’s almost impossible to have a constructive public discussion about the elderly and the share of the economy they occupy so long as deficit hysteria continues.

Don’t go to Pete Peterson’s Fiscal Times for balanced reporting on Social Security and the federal fisc. That would be like asking Col. Qadaffi for news and analysis on Middle Eastern populism. But every now and then, the miscreants raise an important issue. Perhaps inadvertently, but there it is.

Eric Schurenberg, who purveys politically palatable news to the business community as head of BNET and, published an op-ed in the Fiscal Times last week that purported to demolish the “myths” bolstering “that fiscal fun-house mirror, the Social Security trust fund.” The piece is full of misconceptions that are nicely demolished elsewhere.

But Schurenberg raises an issue that’s been almost entirely left out of the current debate about reducing the deficit and “reforming” entitlements like Social Security and Medicare. “The most destructive myth of all,” Schurenberg writes, is that

Social Security is, fiscally speaking, an end in itself. In the real world that Social Security actually operates in, the government and its citizens all have other obligations.

Schurenberg quotes the Urban Institute’s Eugene Stueurle on this point:

Social Security as a budget issue revolves not simply around its internal accounting balances and trust funds, but rather how much of the economy it occupies and how much of future growth it absorbs.

But the real issue, Schurenberg says correctly, isn’t the how much of the economy Social Security occupies, but “how much do we want to spend supporting everyone who happens to live past 62?”

Of course, if Washington wants to, it can “pull the levers to bring Social Security into balance.” And we already know the steps Congress would consider, which have been repeated ad nauseam over the past several years: Means test benefits. Raise the retirement age. Adjust cost-of-living formulas downward. Maybe (if our lawmakers are in a mildly progressive mood) raise the cap on income subject to payroll tax.

The common denominator of all these measures except the last is that they don’t propose to do anything about the actual share of the economy that retirees will occupy in the future. All they do is cut government spending. The argument runs like this:

The Social Security trust funds don’t exit. And even if they did, the truth is that the money belongs to the government, which can do with it anything our lawmakers decide. Which they do, by replacing the cash with Treasury bonds. Therefore, the trust funds – and any moral obligation inherent in them – shouldn’t stand in the way of Congress doing anything it likes to “balance” the needs of other parties against those of the elderly.

But, as a fairly prominent right-wing economist recently pointed out to me, “The government doesn’t absorb risk. It only redistributes it.” Means-testing, raising the retirement age, and cutting – OK, slowing the growth of – cost-of-living adjustments would certainly downscale Social Security, ultimately to the point where it becomes economically irrelevant. Drowning it in the bathtub along with the rest of government might not even be necessary.

But what happens to seniors? Their needs and desires – 20, 30, 70 years from now – won’t be affected. The only difference is that the social function of an old-age benefits system built on the social insurance model will be eliminated. Social Security takes the risk that working people will live an impoverished old age, and distributes it in a more progressive direction – across classes, generations, races and genders. Winding down Social Security means no redistribution.

We don’t have to look decades down the road to see the effects. Today, demand is growing for nursing home and long-term care services. Affluent people are willing to pay top dollar for quality care, and facilities are sprouting up all over the Sunbelt and beyond to cater to them. But affordable, quality housing for less well-off seniors that’s designed to meet their physical needs is much less available.

Seniors with nagging ailments seek out lavish care. But physicians with specialized geriatric training are in short supply and thus aren’t within reach of retirees with modest resources. As for work, there’s a lot of talk about the desirability of people continuing to work past the traditional retirement age. Many affluent businesspeople and professionals never really stop working – and their workplaces accommodate their needs. But if we want people of ordinary means to keep working for a significant number of years, a lot more ordinary workplaces will have to be refitted to accommodate them. That’s not being done.

In the reality-bubble of Washington, it’s easy to overlook the fact that the elderly have been feeling the pinch for years – from health care and housing costs to the higher retirement age that was legislated in 1983 and is still working its way through the population. These pressures are already recreating the have-and-have-not world the elderly occupied before Social Security and Medicare revolutionized their lives in the ’50s, ’60s, and ’70s. But the changes that people like Schurenberg recommend for Social Security will significantly accelerate the process.

That’s why Schurenberg’s question is so apt: How much do we want to spend supporting everyone who happens to live past 62? Which is another way of asking, How much do we – collectively, as a society – want to spend on them, and how much do we want to leave to them and – inevitably – their families?

Because Schurenberg is also right that the elderly don’t live in a vacuum. The benefits that society extends to seniors – which include everything from SSI to Meals on Wheels to Medicaid – are constantly balanced against the claims of other groups. For instance, if we want to think of them as part of the same overall system, it would be a no-brainer to just cancel the Bush tax cuts and stop worrying about Social Security’s 75-year-to-infinity-if you-believe-that-stuff deficit, which would be canceled out, more or less.

But again, downsizing Social Security won’t relieve us, as a society, of having to worry about what will happen to the elderly. Government will not have canceled the risks involved, only shifted them over to seniors and their families. Seniors won’t magically decide they want less of anything as a result of cutbacks. And as we know, once the baby boomers have all passed 65 – or 67 – there will be a lot more elderly.

We have our ways, some deficit hawks have hinted darkly, like taking the vote away from seniors. But essentially, they have convinced themselves of a fantasy in which, by moving money from one pocket to another, they can shrink the slice of the economic pie that goes to seniors in coming decades, thus enlarging the portion that goes to everyone else. They can’t. The only change will be in the portion of the slice that goes to affluent seniors rather than those with less money.

There are ways to reduce the cost impact of an aging society, but they aren’t the kinds of things critics of Social Security – and government spending in general – like to think about, because they require more spending in the short term, not less: Preventive health care. More and better geriatric care. Affordable housing tailored to seniors’ needs – for instance, intergenerational cooperative living arrangements. Workplaces that can accommodate older workers.

But the reality is that for our society to absorb an older population as productively and cheaply as possible, we will have to learn to think less like accountants and actuaries and more like doctors, social workers and activists, designers and builders. Less like Pete Peterson or Eric Schurenberg and more like Lewis Mumford.