Social Security: What Role for the Future?

Social Security: What Role for the Future?

Social Security: What Role for the Future?

Social Security: What Role for the Future?

Synopsis

Recent reports predict that, barring any changes, the Social Security program will become insolvent--no longer able to pay promised benefits in full--around the year 2030, well within the retirement years of the baby boom generation. They also predict that the trust fund will stop being a net contributor and become instead a net claimant on the federal budget in the year 2013--much earlier than previously thought. With the world population aging, the increasing number of dependent senior citizens in all countries will become a major public policy issue that will have to be addressed continually over the next fifty years.

Social Security: What Role for the Future? takes a fresh look at the questions essential to understanding the future of old-age protection under Social Security. Experts in economics, actuarial science, and public policy examine such front-burner issues as the effects that variables such as mortality, births, inflation, wage levels, and pension benefits will have on the income of future retirees; the implications and effects of alternative levels of funding and financing on Social Security; and the prospects for publicly and privately financed income programs. The authors conclude with an examination of social security programs around the world and pose critical questions about the future direction of Social Security in the United States--questions that Congress and the American public will have to address in the coming years.

The contributors include Robert H. Binstock, Barry P. Bosworth, Robert Brown, Gary Burtless, David M. Cutler, Jagadeesh Gokhale, Edward Gramlich, Stephen Goss, Robert Hagemann, Dalmer Hoskins, Estelle James, Diane Macunovich, David Mullins, Alicia H. Munnell, Robert J. Myers, Martha Phillips, Sylvester Schieber, Margaret Simms, C. Eugene Steuerle, and Carolyn Weaver.

Copublished with the National Academy of Social Insurance

Excerpt

David C. Lindeman

Recent reports of the Old Age, Survivors', and Disability Insurance (OASDI) trustees note an increasing deficiency in the program's long-term financing. From the perspective of annual flow, the reports project that the deficiency will grow to between 3 and 5 percent of annual payroll after the year 2020 and will amount to approximately 15 percent of program spending over the next seventy-five years. More important, however, the reports project that unless corrective action is taken, the Social Security program will become insolvent--no longer be able to pay promised benefits in full--around the year 2030, well within the retirement years of the baby boom generation. And, equally critical, the date at which the trust fund stops being a net contributor and becomes a net claimant on the federal budget has been moved forward to the year 2013 in these projections.

These findings are disturbing to many people who believed that the 1983 Social Security amendments, which were largely based on the Greenspan commission's recommendations, had "fixed" the program through the period of the baby boom's retirement. in addition, the news media have begun to report increasing skepticism, especially among the young, of whether Social Security will be paying anything at all when they reach retirement age.

In November 1994, the American public elected a Republican majority in both houses of Congress, despite having elected a "New Democrat" president in 1992. Although it can be argued that the country had been tending to the right for more than two decades, these elections opened up explicit debates about the basic ends and means of government. the welfare state consensus forged in the prosperity of the period 1947-73 is now under strong challenge.

The notion of fundamental health care reform collapsed in 1994, and substantial cuts on spending for the elderly and disabled have come under active discussion in 1995, in a debate over Medicare that may presage a similar debate about Social Security in 1997. the Concord Coalition, led by former senators . . .

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