Common Sense on Social Security

A Centrist Perspective on the Social Security Reform Dilemma



Social Security Reform: Breaking the Stalemate

Section 4. Narrowing the Choices

Two of the options cited above have almost no support. A permanent subsidy for Social Security (Option One) is out of the question. Boosting the payroll tax (Option Three) is also a non-starter.

The issue of cutting benefits (Option Two) is a touchy one with the public. Public opinion polls show widespread public discontent with the idea of trimming benefits or raising the retirement age. Lasting solvency for Social Security is essentially unattainable, though, without at least a modest scaling back in the benefit schedule over the next few decades.

The remaining options aren't quite so painful. Option Six plugs in a more realistic forecast for GDP growth and inflation, and ultimately solves about a fifth of the Social Security financing problem. Expanding the size of the tax base, Option Four, strikes a responsive chord with the public, and it closes an additional fifth of the total gap. Let's assume that both of these options are adopted, thus closing about two-fifths of the total gap.

Now we're up against it. How is the remaining three-fifths to be closed? Option Two, cutting benefits, is clearly marked "handle with care." A gently phased-in reduction in the replacement rate, phased in over the next 35 to 40 years, narrows the gap a bit further. That leaves Option Five, the savings option. Is the savings option capable of closing the remainder?

The answer is "Yes, if...." A low-risk, reasonably affordable savings strategy is indeed feasible.

But we cannot examine the savings option in any detail without first addressing the goal of lasting solvency, and examining more closely the question of future stock market returns.


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Common Sense on Social Security
An initiative of The Wallcharts Workshop
A Non-Profit Successor to the Collaborative Democracy Project

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For more information on Social Security, the following web sites are suggested

The Concord Coalition

The Social Security Administration


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Revision Date April 13, 2006