Top Ten Myths of Social Security Reform

The future viability of the Social Security system in the United States has pervaded public policy and political debate in recent years. Changing population and age demographics arguably threaten the financial stability of the current “pay-as-you-go” infrastructure, which pays current retiree distributions out of the coffers amassed from current workers’ program contributions and past surpluses. In the following article, Dr. Jeffrey Brown, Dr. Kevin A. Hassett, and Dr. Kent Smetters identify and analyze multiple half-truths and proposed solutions regarding Social Security reform that have gained public momentum. Among them, the authors dispel notions of both the program’s long-term stability under the status quo and catastrophic doomsday scenarios advanced by skeptics. Instead, the authors methodically demonstrate that while the current Social Security system forecasts a deficit within a few decades, the shortfall is addressable through potential changes in benefit levels, tax rates, and rechanneling of program payments into personal retirement accounts. Short of recommending a particular remedy, the authors argue that any proposed solution to Social Security’s projected shortfall will demand fundamental shifts in both the revenue (i.e., tax) and cost (i.e., benefit) sides of the financial equation. It is a reality that must be internalized by budget analysts in addressing Social Security’s ills, and the time is now for an action plan that recognizes and instills such revisions.