Saving Social Security
4 Pages Posted: 11 Mar 2016 Last revised: 25 Apr 2016
Date Written: December 23, 1999
The outlook for the U.S. Social Security system is poor. Benefit schedules that assure solvency probably require (1) politicians to give up power they are unwilling to give up, and (2) workers to contribute more of their future production than they are willing to. In contrast, the outlook for politicians presenting disingenuous proposals to save Social Security is good, because politicians fool enough of the people enough of the time to get elected. This paper shows that (1) the debate about funding Social Security with taxes or government debt is irrelevant, (2) if the Social Security system trust fund is invested in government debt, solvency is unrelated to the trust fund's stated value, and (3) if the trust fund is invested in private securities, solvency does not depend on what it is invested in but is related to its value.
Keywords: social security, retirement funding, social security insolvency
JEL Classification: G10, G11, G12, G14
Suggested Citation: Suggested Citation