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Improving Understanding of the Social Security OASDI Trust Fund

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  • Schmult, Brian

Abstract

This paper argues that the Social Security OASDI Trust Fund is widely misunderstood by the public, thereby corrupting the debate on how to handle future scheduled benefits, and increasing the risk of program changes that would not be accepted if people understood how the program functions. The Trust Fund is a fiscal nullity but appears to be regarded by many as essential, hence the public debate is about how to ``fix'' it, rather than about the moral question of {\it whether} to fund scheduled benefits, which are clearly affordable. This misunderstanding indicates the need for a shift in emphasis in public descriptions of the program. For this, this paper lays out a set of data, arguments and analogies that are asserted to be accurate representations of the OASDI program and Trust Fund operation, and which are proposed as tools for public education. Finally, this paper argues that an important step in shifting public debate is to re-institute full recourse to Treasury funding for any payroll tax shortfall, which will force the public debate back to benefit levels and revenue sources.

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File URL: http://mpra.ub.uni-muenchen.de/44227/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 44227.

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Date of creation: 24 Dec 2012
Date of revision: 05 Feb 2013
Handle: RePEc:pra:mprapa:44227

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Keywords: Social Security; Trust Fund; OASDI;

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  1. Kent Smetters, 2004. "Is the Social Security Trust Fund a Store of Value?," American Economic Review, American Economic Association, vol. 94(2), pages 176-181, May.
  2. Lafrance, Amelie & Larochelle-Cote, Sebastien, 2011. "Consumption Patterns Among Aging Canadians: A Synthetic Cohort Approach," Economic Analysis (EA) Research Paper Series 2011067e, Statistics Canada, Analytical Studies Branch.
  3. Martin Neil Baily & Jacob Funk Kirkegaard, 2009. "US Pension Reform: Lessons from Other Countries," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 4259.
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