<<  <  >  >>

21For a detailed discussion of Social Security's poor returns

12

1998 Trustees Report, Table II.F8., p. 97.

see William G. Shipman, "Retiring with Dignity: Social

13

Peter J. Ferrara, Social Security: The Inherent Contra-

Security vs. Private Markets," Cato Institute Social

diction (San Francisco: Cato Institute, 1980), p. 326.

Security Paper no. 2, August 14, 1995, and Melissa

Hieger and William G. Shipman, "Common Objections

14

The Statement of Liabilities and Other Financial

to a Market-Based Social Security System: A Response,"

Commitments of the U.S. Government is compiled in

Cato Institute Social Security Paper no. 10, July 22, 1997.

accordance with 31 U.S.C. 331(b). The report discloses the

Also see Laurence J. Kotlikoff et al., "Social Security's

liabilities, commitments, and contingencies of the federal

Treatment of Postwar Americans," Merrill Lynch, New

government as of a September 30 fiscal year. Only the

York, April 15, 1998. Also see Peter Ferrara and Michael

open-group model condition is reported.

Tanner, A New Deal for Social Security (Washington: Cato

Institute, 1998).

15

According to the U.S. Bureau of the Census the number

of All Households is 101 million in 1998. See

221998

Trustees Report, Table II.F15., p. 113.

http://www.census.gov/population/projections/nation/hh-

fam/table 1 n.txt.

23Ibid.,

Table II.F13., p. 108.

16

This amount is an estimate from the OASI income rate

24See

Kotlikoff et al., p. 7.

and cost rate imbalance and taxable payroll in 2072. See

25These

rates are ultimate replacement rates, that is, assum-

1998 Trustees Report, Table II.F13., p. 108, and Table

ing one saves and invests for a full working career. They

III.B1., p. 175.

are inflation indexed and payable to age 80. If life

17Report

of the 1994­1996 Advisory Council on Social

expectancy increases, replacement rates decrease.

Security, Volume I: Findings and Recommendations,

26

1998 Trustees Report, Table III.B5., pp. 183, 184. The

Washington, pp. 15­29.

replacement rate at age 65 for all income workers is sched-

18See

1998 Trustees Report, Table II.F13., p. 108. The per-

uled to decline. For a low-income worker it will decline

cent change from the income rate to the cost rate is the

almost 12 percent by 2075.

required increase in taxes. The converse is the required

27"Maximum

income" refers to wage income subject to the

decrease in benefits.

OASI tax. In 1998 it is $68,400.

19See

Peter M. Wheeler, Fast Facts & Figures About

28Ferrara

and Tanner, pp. 175­204.

Social Security 1997, The Social Security Administration's

Office of Research, Evaluation and Statistics (ORES),

29For example, see Martin Feldstein and Andrew Samwick,

June 1997, pp. 7, 30.

"Two Percent Personal Retirement Accounts: Their

201998

Potential Effects on Social Security Tax Rates and

Trustees Report, Table II.F13., p. 108.

National Saving," National Bureau for Economic

Research, Cambridge, Mass., 1998.

14