Friday, February 4, 2011

New paper: “Can we trust the Social Security Trust Funds?”

"Can We Trust the Social Security Trust Funds?" Mercatus on Policy, No. 88, January 2011

JASON J. FICHTNER, George Mason University - Mercatus Center
VERONIQUE DE RUGY, Mercatus Center at George Mason University

Abstract: In the next year, lawmakers will consider different options for Social Security reform. In order to adopt the best policies, they must have all the facts. Unfortunately, much rampant confusion exists about how the Social Security trust funds operate. Some question whether the bonds held as assets in the trust funds are "real," while others misleadingly claim that the existence of trust funds means that Social Security does not face a financial problem. The truth is while the trust funds hold real assets, Social Security also faces real financial problems.


1 comment:

Arne said...

It would be nice if they were clearer about the fact that raising (income) taxes to redeem existing treasuries is different from rasing (payroll) taxes to pay for more than 75 pecent of scheduled benefits when the trust fund is depleted.

The discussion would also benefit from recognition of the need to never actually deplete the trust fund.