Assessing the Plans Proposed by the President's Commission to Strengthen Social Security

Posted: 26 Jul 2002

See all articles by Peter A. Diamond

Peter A. Diamond

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute)

Peter R. Orszag

Lazard Asset Management

Abstract

The President's Commission to Strengthen Social Security proposed three plans for reforming Social Security. All of them would create individual accounts financed by diverting funds from the Social Security Trust Fund. One of the three commission proposals (Model 1) would not restore long-term balance to Social Security. This analysis focuses on the other two proposals - Models 2 and 3 - that would restore long-term balance. Models 2 and 3 contain a number of elements and are quite complicated. To understand the plans, the authors describe their overall financing first and then examine their proposed changes to Social Security benefits (which they refer to as traditional benefits), the individual accounts that the plans would establish, and the combined effect on retirement income from the changes in traditional Social Security benefits and the individual accounts.

Suggested Citation

Diamond, Peter A. and Orszag, Peter R., Assessing the Plans Proposed by the President's Commission to Strengthen Social Security. Tax Notes, Vol. 96, No. 5, July 29, 2002. Available at SSRN: https://ssrn.com/abstract=320340

Peter A. Diamond (Contact Author)

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

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National Bureau of Economic Research (NBER) ( email )

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CESifo (Center for Economic Studies and Ifo Institute) ( email )

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Peter R. Orszag

Lazard Asset Management ( email )

30 Rockefeller Plaza
New York, NY 10112
United States

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