A Primer on Privatization

Brief

A Primer on Privatization

Abstract

Just a few years after the first baby boomers change from taxpayers into retirees, Social Security will begin paying out more in benefits than it collects in revenues. For the next three decades, working Americans are expected to come up with the income taxes necessary to pay interest and principal on bonds held by the Social Security trust fund, thus technically enabling it to run deficits for a while. By about 2040, however, those deficits will have led to the exhaustion of the trust fund, most baby boomers will have retired, and Social Security taxes will be sufficient to cover only about two-thirds of the benefits promised under current formulas.

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