Yesterday, we talked about how the opportunity cost of not spending on defense might in the end be greater than the spending. Today, I’d like to do the same for social security.

I don’t believe the case for spending is clear here, and I’m mindful of the weakness in the opportunity cost argument. After all, if I bought all of the great deals I get in my e-mail every day, I would be bankrupted by the savings. But that’s a different post.

I was in Virginia late last week, speaking to a group of clients, and had a couple of interesting conversations that are worth expanding on here. To start off, we talked about what the U.S. is actually spending its money on, and how and whether it made sense to cut. This is a slightly different take on the spending discussion than you normally see. Typically, the discussion is based on the assumption that spending is more or less set; the issue is how to cut, rather than whether cuts make sense.

I am in Virginia today and tomorrow, speaking to groups of clients. With no major economic stories going on, I thought I would do a couple of quick hits on various topics.

As I wrote after Cyprus, I moved from a not-at-all-certain belief that the euro would make it, for political reasons, to a just-as-uncertain suspicion that it would not (also for political reasons). Recent events continue to widen the gap between the “make it” and “not make it” conclusions.

When Greece first defaulted, the narrative was all about irresponsible Greek borrowing, with the clear implication that they had it coming. News coverage focused on early retirement, state pensions at 50, and low tax compliance. In fact, when default hit, imports of necessary goods such as medicines also essentially stopped for most of the population. Very little of that made it into mainstream coverage.

On the heels of yesterday’s post on risk, outliers, and uncertainty, I saw an interesting article today in the New York Times. It discusses a recent paper highlighting potential errors in the work of Carmen Reinhart and Kenneth Rogoff, authors of the influential 2010 economic study “Growth in a Time of Debt” and the book This Time Is Different.

Covering financial crises in many countries over the past several centuries, Reinhart and Rogoff’s (RR) massive study draws the conclusion—controversial in certain circles—that, when a country’s overall debt exceeds a certain level with respect to the size of the country’s economy, expressed as GDP, future growth declines. It is used as an argument against excessive government spending and debt, particularly here in the U.S.

Like everyone else, I have been affected by the terror attacks of the past couple of decades. I mourned those killed in 9/11, cried for the Sandy Hook children, and sat appalled at Oklahoma City, but the Boston attacks have hit home the hardest, literally. I have never been to Oklahoma City, never lived in New York, so as much as it hurt, it was abstract—removed.

Not this time. My wife and son easily could have been at the finish line for the Boston Marathon. They were at home, working in the back yard, but they could have been there. I have friends who work in that area and had gone down to see the race. I haven’t heard that any of them were injured, but it could have happened.

Several times over the past couple of months, I’ve mentioned that, while we certainly have an unemployment problem now, changing demographics will mean that the U.S., along with most of the developed countries (and China!), will eventually have a labor shortage. Hard to believe, I know, but then again, in 2005, most people didn’t believe that the housing market could ever go down.

I’ve also noted many times that part of the declining unemployment rate may be due to older workers retiring (to put it at its most favorable) or simply giving up on the labor market. As workers get older, a trend that is continuing, eventually they’ll simply drop out of the labor force in one way or another.

The economic stats just keep bouncing around. Although no single statistic is worth getting too excited over, the general trend of the data is pretty indicative, and what we are seeing is a decline in growth after the strong first quarter.

We will be hearing quite a bit about the Chained Consumer Price Index (chained CPI) over the next couple days, though most of the details don’t matter. It’s the first of two major takeaways from the president’s proposed budget.

For the sake of completeness, here’s the definition of chained CPI. What matters for the average citizen, however, is one thing: chained CPI increases more slowly than the inflation measures that are currently used, the CPI-U (the CPI for All Urban Workers) and CPI-W (the CPI for All Urban Wage Earners and Clerical Workers). By shifting the measure used, payments for social security will increase more slowly over time.

I love alliteration. A game my family plays on long car trips is to see how many words starting with the same letter we can string together and still make sense. I hold the record so far with something like Cape Cod Canal Commission Community College Cheerleading Co-Captain’s Conference Center classroom chatter, or CCCCCCCCCCCcc. Top that!

The topic for today, however, is the budget battle. We now have three budgets out there—the Senate Democrats’, the House Republicans’, and the President’s. While none of them will be passed as presented, we can reasonably define the box that the final budget will fit in. I plan to do a detailed analysis and comparison in the next couple of days.