The Treasury is studying reform methods to make the Social Security system sound. In the first of a series of Issue Briefs, Treasury looks at how Social Security affects current and future individuals and generations and explains why reform can be fairer to future generations the sooner it is implemented.
In the Issue Brief, it is disclosed that Social Security can be made sound in a number of different ways:
- Raise the payroll tax rate immediately by 3.5 percent.
- Wait until 2041 (the year the system is expected to be depleted) and raise the payroll tax rate by 5.8 percent.
- Cut retiree benefits by 20.4 percent immediately.
- Wait until 2041 and cut benefits by 30.4 percent.
- Encourage higher fertility and/or immigration.
Although the Social Security system was not designed to be the only means of revenue for our nation's retirees, the reality is that for many people today, there is nothing else. The original system promised more to its participants than they paid in, and going back on that promise is not considered to be a viable alternative.
The bottom line, presented in the report, is that a decision needs to be made, and soon, so that the least amount of harm is done to current and future Social Security recipients.
You can read the entire Issue Brief No. 1. More Issue Briefs will follow.