Social Security and the budget are much on the minds of members of Congress and the public. Growth of the Federal debt has been unprecedented. At that same time, the Social Security reserves are larger than ever and increasing fast.
In the early 1980s, Social Security experienced a short-term financing crisis. The National Commission on Social Security Reform, organized by President Reagan and chaired by Alan Greenspan, proposed a series of changes most of which Congress enacted. The short-term crisis was resolved and trust fund reserves began to grow. These reserves were seen as a cushion to help meet the costs of benefits for the baby boom generation, whose retiremtnt will begin early in the twenty-first century.
The Greenspan commission did not project economic growth to be as rapid as it turned out to be and therefore underestimated the accumulation of reserves. Paradoxically, however, the commission was more optimistic about the long-run balance between revenues and expenditures than current projections. At the same time that both reserve accumulation and the projected need for those reserves have surpassed expectations, federal deficits on other operations of government have reached unprecedented levels. Because Social Security reserves are included in the Gramm-Rudmann-Hollings deficit reduction targets, a surplus in the Social Security trust fund makes a deficit in the gerneral revenues look smaller than it actually is. By the end of 1988, Social Security reserves totalled $104 billion.
On December 15 and 16, 1988, the National Academy of Social Insurance held a two-day conference on the relationship between Social Security and the deficit, as part of its First Annual Meeting. More than 200 social insurance experts, policy analysts, members of Congress and their staff, executive branch staff and business and labor leaders came to the Washington Court Hotel in Washington, D.C. to participate in the event.
The program examined four topic areas:
- Setting Long-Run Deficit Reduction Targets: The Politics of Budget Design
- Costs of the Aging Population: Implications for Current Budget Policy
- Public Opinion on Social Security and the Budget
- Formulating a Deficit Reduction Package: What Is the Role of Social Security
Henry J. Aaron
The Brookings Institution
A book of published proceedings, Social Security and the Budget, edited by Henry J. Aaron, is available.