Why expanding Social Security is a bad idea

A New America Foundation proposal would cost 3.7 percent of GDP and crowd out the private saving that drives our economy. 

"Expanded Social Security," a New America Foundation (NAF) policy white paper by Michael Lind, Joshua Freedman, Robert Hiltonsmith, and Steven Hill, argues for expanding Social Security by paying each retiree a flat annual benefit of $11,669 in addition to their traditional Social Security benefits. The idea is to provide the typical retiree with a guaranteed "replacement rate" of 60 percent of his pre-retirement earnings, with higher replacement rates for low earners. The supplement would cost around 3.7 percent of GDP. Added to Social Security's forecasted cost of 5.6 percent of GDP in 2035, total outlays would reach 9.3 percent of GDP.

I like anyone who is willing to look at Social Security reform, and I have some affinity for the simplicity and universality of flat benefits. But the NAF paper misses a few important factors in thinking about Social Security reform and the pros and cons of expanding the program. Some of these may seem obvious - for example, if we can't afford the entitlements we have now, where do we get almost 4 percent of GDP for a new expansion? - so I'll focus on two things they have not given due attention. 

Read the full text of this article on the American website.

Also Visit
AEIdeas Blog The American Magazine
About the Author

 

Andrew G.
Biggs

What's new on AEI

AEI Election Watch 2014: What will happen and why it matters
image A nation divided by marriage
image Teaching reform
image Socialist party pushing $20 minimum wage defends $13-an-hour job listing
AEI on Facebook
Events Calendar
  • 27
    MON
  • 28
    TUE
  • 29
    WED
  • 30
    THU
  • 31
    FRI
Monday, October 27, 2014 | 10:00 a.m. – 11:30 a.m.
State income taxes and the Supreme Court: Maryland Comptroller v. Wynne

Please join AEI for a panel discussion exploring these and other questions about this crucial case.

Tuesday, October 28, 2014 | 9:30 a.m. – 12:15 p.m.
For richer, for poorer: How family structures economic success in America

Join Lerman, Wilcox, and a group of distinguished scholars and commentators for the release of Lerman and Wilcox’s report, which examines the relationships among and policy implications of marriage, family structure, and economic success in America.

Tuesday, October 28, 2014 | 5:30 p.m. – 7:00 p.m.
The 7 deadly virtues: 18 conservative writers on why the virtuous life is funny as hell

Please join AEI for a book forum moderated by Last and featuring five of these leading conservative voices. By the time the forum is over, attendees may be on their way to discovering an entirely different — and better — moral universe.

Thursday, October 30, 2014 | 2:00 p.m. – 3:00 p.m.
A nuclear deal with Iran? Weighing the possibilities

Join us, as experts discuss their predictions for whether the United States will strike a nuclear deal with Iran ahead of the November 24 deadline, and the repercussions of the possible outcomes.

Thursday, October 30, 2014 | 5:00 p.m. – 6:15 p.m.
The forgotten depression — 1921: The crash that cured itself

Please join Author James Grant and AEI senior economists for a discussion about Grant's book, "The Forgotten Depression: 1921: The Crash That Cured Itself" (Simon & Schuster, 2014).

No events scheduled today.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.