The Social Security system in the U.S. is the primary source of economic security to the majority of older Americans. The current system is large and complex, and, due to the projected financing deficit, many changes have been proposed to the Social Security program. The objective of this project is to develop a financing model of the Social Security system that could be used by policy makers, researchers, and interest groups to create reasonable reform proposals and to evaluate the resulting effects on the system and beneficiaries. The financing model will be based on economic and demographic assumptions and will produce estimates of the year-by-year cash flow into and out of the Trust Funds, as well as the long-range cost rates, income rates, and actuarial balances. The model will also have the capability to analyze proposals to privatize all or some portions of the current program, and to show the net effect on beneficiaries (e.g., the adjusted social security benefit and the amount of the privately-financed annuity that would be available to beneficiaries). Currently, the Office of the Actuary at Social Security is the only entity, public or private, with the ability to make long-range cost estimates on the Social Security program. Even the Congressional Budget Office only has the ability to make short-range projections. Therefore, the proposal would create a unique and needed capability to analyze Social Security reform.
The social Security (SS) financing model would be marketed to private groups interested in SS policy issues or reform, researchers and consultants, the Advisory Board on SS, insurance companies, and govt. agencies such as the CBO, the Office of the Actuary, SSA, and Congressional staff. Private groups that have not only expressed interest in SS reform, but currently have created task forces to study such issues, include the U.S. Chamber of Commerce, AARP, the Business Roundtable, the Cato Institute, the National Assn. of Manufacturers, the National Federation of Independent Business, the Council of Life Insurers, the American Bankers Assn., the Investment Co. Institute, and the Business Leadership Council.
