The key points in the brief are as follows:
- Social Security faces a shortfall over the indefinite future of $13.6 trillion in present-value terms, an amount equal to 3.5 percent of future taxable payrolls. Looking at the gap over a shorter horizon provides only limited information on the financial status of the program.
- Social Security can be made permanently solvent only by reducing the present value of scheduled benefits and/or increasing the present value of scheduled tax revenues. Other changes to the program might be desirable, but only these can restore solvency permanently.
- Delaying changes to Social Security reduces the number of cohorts over which the burden of reform can be spread. Not taking action is thus unfair to future generations. This is a significant cost of delay.
- By itself, faster economic growth will not solve Social Security's financial imbalance - realistically, there is no way to 'grow out of the problem.'
See page 1 of the linked brief.
The $13.6 trillion dollar shortfall comes from the fact that those who retired in the earliest years of the program received far more than they contributed. As a consequence, in my opinion, the shortfall should be met from general tax revenues and not put on the backs of current and future workers.
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1 comment:
I believe college tuition should be tax deductable with the amount deducted required to be put into a personal retirement account. That amount should then be removed from any future social security benefits. In the long run the citizenship is better educated meaning more tax revenue for the government, less dependence on government services, more consumer spending, more competitive in the global economy. And of course decreased payments out of social security.
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