Americans' Dependency on Social Security

Laurence J. Kotlikoff, Ben Marx, Pietro Rizza
2006 Social Science Research Network  
According to a recent, highly detailed, and conservative estimate by Gokhale and Smetters (2005) , the present value difference between the U.S. government's projected future expenditures and its projected future tax receipts exceeds $60 trillion! Closing this enormous fiscal gap requires massive and extremely painful expenditure cuts, tax hikes, or both. Delaying such adjustments exacerbates the fiscal crisis and raises the prospect of a major financial/economic meltdown, including high and
more » ... cluding high and growing rates of inflation if the government uses the printing press to "pay" its bills. The inevitable adjustment to a sustainable fiscal policy will, no doubt, involve a variety of different tax increases and expenditure reductions. But these tax hikes and spending cuts need not be explicit. Instead, they may arise by allowing price hikes to outpace the indexation of tax and expenditure provisions. Will Social Security benefits, especially those of the rich, come under an explicit or implicit chopping block? No one can say for sure. But what we can say and do study in this paper is how potential Social Security benefit cuts would impact the wellbeing of different American households.
doi:10.2139/ssrn.1094995 fatcat:wotfixzcljedxhatgv7k6ngb6m