New GDAE Working Paper on Social Security President Bush has stated that Social Security is facing a "crisis" and will soon be "bankrupt." He is proposing drastic changes in the existing system of retirement benefits. A new paper by GDAE researchers Brian Roach and Frank Ackerman develops a model of Social Security finances, in order to determine whether Social Security is really facing a crisis and to explore the range of policies that could remedy future shortfalls. Their research illustrates the extreme sensitivity of Social Security projections to the underlying economic assumptions. One analysis in the paper projects Social Security's finances using the more optimistic economic assumptions made in the federal budget; this change alone eliminates virtually the entire projected 75-year Social Security shortfall. The paper also provides details on a variety of policy options that could secure the finances of Social Security through 2080. These include increasing the cap on income subject to Social Security taxation, slowing the growth in average benefits, and raising the Social Security tax rate. The results suggest that various moderate adjustments could secure the finances of Social Security for the next 75 years without major structural changes. The paper concludes that the Social Security program can be adjusted at the margin to reflect modern realities, just as it has been many times over the last 70 years, without a drastic overhaul. To learn more about the paper and download a copy, go to: http://ase.tufts.edu/gdae/highlights/Social_Security.htm
-- Jim Devine [EMAIL PROTECTED] http://myweb.lmu.edu/jdevine
