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Social Security - A Solution

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Raising taxes and cutting benefits are politically unpopular options for restoring solvency to the Social Security system. Tax hikes would increase disincentives to work and save. Benefit curs would be unfair to those who have worked and saved with the expectation of receiving current levels of benefits. There is, however, a third option that would retain the benefits of retirees and older workers, and impose no higher taxes on young and future generations. It would also make Social Security sustainable and provide the present level of benefits to young and future workers. this plan involves gradually investing current contributions in private capital markets.

Suggested citation: “Social Security - A Solution,” Federal Reserve Bank of Cleveland, Economic Trends, no. 97-06, pp. 15, 06.01.1997.

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