Academic journal article Journal of Accountancy

SSA Commissioner Urges Rescue Plan

Academic journal article Journal of Accountancy

SSA Commissioner Urges Rescue Plan

Article excerpt

Speaking in June before an audience of AICPA technical managers, Social Security Administration Commissioner Kenneth S. Apfel shared his views on the major challenges confronting his agency, including the projected insolvency in 2034 of the Old-Age, Survivors and Disability Trust Fund.

Apfel's appearance was part of a nationwide educational campaign to drum up support for President Clinton's plan to use federal budget surpluses to pay down the national debt and devote the resulting interest savings to extending the trust fund's solvency until 2054.

The 2000 annual report of the Social Security board of trustees said that in 2015 trust fund expenditures will begin to exceed payroll tax revenues. Beginning in 2025 trust fund reserves may be used to pay benefits. And unless an alternative is found, when those reserves are depleted beneficiaries may receive only 72% of the amounts due them. (See "More On Social Security Reform," JofA, Feb.99, page 12.)

"This is not only an issue of finance, budgeting and economics," Apfel said. "It's also about determining what is an adequate benefit for retirees." He noted that over the next 30 years, the number of seniors will double as baby-boomers retire. So, in his view, it makes sense to diversify the trust fund portfolio with equities, which could increase rates of return and obviate some benefit reductions and tax increases.

"But the government should not direct those investments," Apfel said. …

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