Sections

Research

BPEA | 2000 No. 2

Social Security Reform and National Saving in an Era of Budget Surpluses

Jeffrey B. Liebman and
JBL
Jeffrey B. Liebman Harvard University
Douglas Elmendorf
Douglas Elmendorf Harvard University Distinguished Service Professor - Harvard Kennedy School
Discussants: Matthew D. Shapiro and
MDS
Matthew D. Shapiro
Stephen P. Zeldes
SPZ
Stephen P. Zeldes

2000, No. 2


THE UNEXPECTED EMERGENCE of federal budget surpluses during the late
1990s, combined with official projections that these surpluses will continue
for decades to come, has significantly altered fiscal policymaking.
Congressional and administration budget proposals now aim to balance the
budget exclusive of Social Security, or exclusive of Social Security and
Medicare, rather than on an overall, or unified, basis. Some proposals state
the goal of paying off the entire stock of federal debt held by the public
within a decade and a half. This fiscal bounty has also altered the likely
avenues for Social Security and Medicare reform. Traditional options
for ensuring the programs’ financial stability—benefit cuts and tax
increases—have largely given way to new options focused on using the
expected surpluses to prefund future obligations.