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An Assessment of the Proposals of the President's Commission to Strengthen Social Security

Author

Listed:
  • Diamond Peter

    (pdiamond@mit.edu)

  • Orszag Peter R.

    (porszag@brook.edu)

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 paper focuses on the other two proposals - Models 2 and 3 - which would restore long-term balance. Models 2 and 3 contain a number of elements and are quite complicated. To understand the plans, we describe their proposed changes to Social Security benefits (which we refer to as "traditional benefits"), the individual accounts that the plans would establish, the combined effect on retirement income from the changes in traditional Social Security benefits and the individual accounts, and the impact on Social Security financing and the rest of the budget.

Suggested Citation

  • Diamond Peter & Orszag Peter R., 2002. "An Assessment of the Proposals of the President's Commission to Strengthen Social Security," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 1(1), pages 1-61, October.
    • Handle: RePEc:bpj:bejeap:v:contributions.1:y:2002:i:1:n:10
    DOI: 10.2202/1538-0645.1072
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    References listed on IDEAS

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    1. Murphy, Kevin M & Welch, Finis, 1998. "Perspectives on the Social Security Crisis and Proposed Solutions," American Economic Review, American Economic Association, vol. 88(2), pages 142-150, May.
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    Cited by:

    1. Christoph Borgmann & Matthias Heidler, 2003. "Demographics and Volatile Social Security Wealth: Political Risks of Benefit Rule Changes in Germany," CESifo Working Paper Series 1021, CESifo.
    2. L. Randall Wray, 2005. "Social Security's 70th Anniversary: Surviving 20 Years of Reform," Economics Policy Note Archive 05-6, Levy Economics Institute.
    3. Velloso, Helvia, 2006. "Social Security in the United States: Overview and Outlook," Documentos de Proyectos 3681, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    4. Nicole Maestas & Xiaoyan Li, 2006. "Discouraged Workers? Job Search Outcomes of Older Workers," Working Papers wp133, University of Michigan, Michigan Retirement Research Center.
    5. Pfau, Wade Donald, 2007. "Reforming Social Security: Issues and Challenges for Personal Retirement Accounts," MPRA Paper 19034, University Library of Munich, Germany.
    6. Christoph Borgmann & Matthias Heidler, 2007. "Volatility of Social Security Wealth: Political Risks of Benefit-Rule Changes in Germany," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 63(1), pages 83-106, March.
    7. Engelhardt, Gary V. & Kumar, Anil, 2005. "Social security personal-account participation with government matching," Journal of Pension Economics and Finance, Cambridge University Press, vol. 4(2), pages 155-179, July.
    8. Peter A. Diamond & Peter R. Orszag, 2005. "Saving Social Security," Journal of Economic Perspectives, American Economic Association, vol. 19(2), pages 11-32, Spring.

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