Publications

The most desirable method of financing the transition to personal retirement accounts is to modestly reduce the growth rate of federal spending. Raising taxes would harm the economy. And future benefit cuts are wholly unnecessary, not only because they would do nothing to bridge the short-term financing gap, but also because the eventual proceeds from large personal accounts would more than offset any savings gained from cuts in promised benefits.

Establishing personal retirement accounts creates no net new cost to the Social Security system. The act of refinancing and formalizing the $12 trillion liability is incorrectly interpreted as a “transition cost.” It is simply the part of the unfunded debt obligation that must be covered from sources other than current workers’ FICA contributions. Refinancing enables an eventual elimination of the liability. Alexander Hamilton performed a similar feat during the early days of the Republic.