Publications of Interest

October 23, 2000

The Congressional Budget Office released "The Long Term Budget Outlook," which focuses on the fiscal pressures created by the aging of American society. In 1970, total spending on Social Security, Medicaid and Medicare equaled four percent of gross domestic product. Today, total spending has increased to seven percent of GDP, and unless spending is restrained could increase to 16 percent of GDP.

The National Bureau of Economic Research released "Retirement Responses to Early Social Security Benefit Reductions ," by Olivia S. Mitchell and John W.R. Phillips. Mitchell and Phelps examine how individuals would react to reductions in the Social Security benefits paid to those who take early retirement, concluding that reductions would increase the likelihood an individual would stay in the workforce until normal retirement age.

The Heritage Foundation released "How Railroad Retirement Investment Scheme Threatens Social Security Reform ," and Executive Memorandum by David C. John. John argues that the legislation is bad in itself, in that it lowers taxes and cuts the retirement age at a very time the fund faces large future deficits.

More importantly, the legislation's provisions for government investment in the stock market and its budgetary scoring threaten to make government investment of the Social Security trust fund wrongly appear to be easier to finance than personal retirement accounts. The General Accounting Office released "Social Security Reform: Implications for Private Pensions," which discusses the effect of reform proposals on the private pension system.

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