Public Pension Reform in the U.S. Presidential Campaign

摘要

The U.S. public pension system, known as Social Security, has a big problem. Within the next 15 years, it is expected to use up all its financial reserves. The looming revenue shortfall is hardly surprising. In fact, it has been predicted for more than a quarter of a century. A combination of below-replacement birth rates and rising longevity is boosting the share of Americans who have reached the pensionable age. Under current law, when Social Security reserves are depleted, monthly benefits will have to be financed solely by the dedicated payroll and income tax revenues flowing into the system. The Social Security actuary expects that in 2035 these dedicated revenues will cover just 80% of the pension payments promised under today's benefit formula. In other words, if future Congresses and Presidents do not change the law, pensioners' monthly benefits will have to be cut one-fifth in the next 15 years. One implication of this forecast is that workers who file claims for Social Security today can plausibly expect to see their monthly pensions cut before they reach advanced old age.