Transition Problems Related to Social Security Reform

Testimony

Transition Problems Related to Social Security Reform

Testimony before the House Budget Committee Task Force on Social Security Reform
July 13, 1999

Abstract

The current pay-as-you-go (PAYGO) Social Security system is in trouble. This has led many to support reduced reliance on the traditional PAYGO system and more reliance on a funded system in which contributions would be invested in a mixture of public and private securities, the return on which would be used to finance future pensions. The low rate of return created for the traditional system by adverse demographics would be replaced by a higher rate of return associated with investments in real capital.

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