Countdown to Reform: The Great Social Security Debate

With baby-boomer retirement drawing nearer, Social Security, long a "third rail" in American politics, has become fair game. When President Clinton launched national discussion in April on the future of the programme, the loudest voices seemed to belong to those who claimed the system would go "bankrupt" and argued for scrapping it in favour of a privatized plan. Is the nation's premier social insurance programme on the brink of collapse? In this book, two of the nation's most widely respected economists argue that the "Chicken Little" view of Social Security - that future costs doom the current system - is so exaggerated that it is just plain wrong. Certainly, the retirement of the baby boom generation will require some adjustments, but they need be no greater in type or size than adjustments the government has adopted to deal with the overall budget deficit. The book provides the historical background of the economic circumstances that different generations have faced in this century and shows how changes in Social Security has affected life in America. The authors also analyze the economic assumptions underlying current reform efforts, closely scrutinizing the increasingly popular proposals to privatize Social Security by transforming it from an insurance programme to a system of individual retirement accounts. Henry J. Aaron and Robert D. Reischauer are senior fellows at the Brookings Institution. Aaron is also vice president of the National Academy of Social Insurance. Reischauer was director of the Congressional Budget Office from 1989 to 1995. They are coeditors of "Setting National Priorities: 1999", (Brookings, forthcoming).