I don't think its that much worse than the end of the dotcom bubble. At least states and schools aren't losing their shirts in plummeting stock prices this time, like they did then. The institutional investment strategies are much more stable than you might think. You might go broke, but your city/county/state probably won't. Which is a vast improvement over last time. The piper will be paid by someone, but it's not the end of the ride.
The Social Security system relies on there being more people paying in than cashing out at any given time. Unless we have negative population growth and post-apocalyptic unemployment, that's always going to be the case. It's an infallible system. Except in those rare cases when a pair of Bushes get into the White House and borrow against social security and invest it in national defense. Since national defense investment gives cash dollar returns to everyone except the federal government, it's kinda hard to pay back those social security loans.
Interesting thought - if we took some of the bailout money and paid back Social Security, and then used the rest to fund a partial bailout, consumer and voter confidence would probably rise just enough to slow down this downward trend a little. It might give us some time to do other things to salvage the economy.
