Making Sense of the Moynihan Gambit: A Perspective on the Social Security Debate

Is the U.S. Social Security system more like a pension plan, wherein Social Security taxes represent a form of premiums for its contributors, or more like a tax and transfer system, which provides a pay-as-you-go income support program for its beneficiaries? Before linking the current Social Security financing debate to legislative attempts to balance the federal budget, we should define the nature of Social Security policy and evaluate whether the present level and composition of government expenditures are prudent.