CATO’s Boccia Advances Social Security Benefit Formula Change to Slow Down Growth
Cato Institute Director of Budget and Entitlement Policy, Romina Boccia, yesterday published a paper outlining a fundamental change to Social Security’s benefit computation logic designed to curtail the growth in benefits for future retirees. Essentially, the change would involve indexing workers’ initial benefits using inflation rates rather than average wage increases to determine primary insurance amounts, a change she suggests “would close 80 percent of the program’s 75‐year funding gap and lead to a surplus in the 75th year, if such a policy began in 2029.” Her analysis also discusses a slightly modified version of the change, in which the change would be limited to the highest 70 percent of earners (progressive price indexing). This alternative approach, she suggests, “would close Social Security’s 75‐year funding gap by 45 percent and achieve near-solvency in the 75th year, again if implemented in 2029.
Ms. Boccia’s post concludes with this summary of the changes, “There’s a way to reduce Social Security’s financial and economic burden and eliminate its unfunded obligations over the long‐term, and it requires no benefit cuts, but merely reductions in the growth of benefits.” And she closes with the refrain that has been echoed in many quarters, “Now we just need to find the political will.” Read her full post on the Cato.org website here.
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