Social Security's Treatment of Postwar Americans

Abstract

Social security faces a major long-term funding crisis. A 38 or greater percentage increase in the system's tax rate is needed to meet benefit payments on an ongoing basis. Tax increases of this magnitude or comparable benefit cuts would significantly worsen social security's treatment of We thank Steven McKay for very helpful comments and Steven McKay and Tim Zayatz of Social Security's Office of the Actuary for critically important and extensive assistance in clarifying OASI benefit determination rules. We also thank Don Fullerton, James Poterba, and participants at the Spring 1998 NBER Public Economics conference for their reactions and advice. Laurence Kotlikoff and Steven Caidwell are grateful to Merrill Lynch & Co. for research support. The authors also thank Economic Security Planning, Inc. for permitting their use for this study of socslMa detailed OASI benefit calculator. All opinions expressed here are strictly those of the authors and are not necessarily those of the Federal

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