TORBEN M. ANDERSEN, University of Aarhus - Department of Economics, CESifo (Center for Economic Studies and Ifo Institute for Economic Research), Centre for Economic Policy Research (CEPR), Institute for the Study of Labor (IZA)
Email: tandersen@econ.au.dk

Approaching demographic shifts are raising concerns about fiscal sustainability in most OECD countries. A widespread view based on the tax-smoothing idea is that a prior consolidation of public finances is required to cope with the predicted trend deterioration in the primary budget balance. Both positive aspects in assessing the order of magnitude of sustainability problems and normative aspects of formulating policy strategies are addressed. It is argued that the smoothing argument cannot unconditionally be applied to the demographic problem. It is important to distinguish between increases in the dependency ratio driven by changes in fertility and longevity. For the former the smoothing argument may be appropriate, but not for the latter. In the case of longevity, a trade-off between consolidation and increasing retirement ages becomes relevant, and there are strong arguments why the latter should be pursued by e.g. linking retirement ages to longevity.

RICHARD V. BURKHAUSER, Cornell University - Department of Policy Analysis & Management (PAM), Syracuse University - Center for Policy Research
Email: rvb1@cornell.edu
MARY C. DALY, St. John's University - School of Law
Email: dalym01@stjohns.edu
PHILIP R. DE JONG, University of Amsterdam - Department of Economics (AE)
Email: ph.dejong@ape.nl

In the 1990s, the United States reformed welfare programs targeted on single mothers and dramatically reduced their benefit receipt while increasing their employment and economic wellbeing. Despite increasing calls to do the same for working age people with disabilities in the U.S., disability cash transfer program rolls continue to grow as their employment rates fall and their economic well-being stagnates. In contrast to the failure to reform United States disability policy, the Netherlands, once considered to have the most out of control disability program among OECD nations, initiated reforms in 2002 that have dramatically reduced their disability cash transfer rolls, while maintaining a strong but less generous social minimum safety net for all those who do not work.

Here we review disability program growth in the United States and the Netherlands, link it to changes in their disability policies and show that while difficult to achieve, fundamental disability reform is possible. We argue that shifts in SSI policies that focus on better integrating working age men and women with disabilities into the work force along the lines of those implemented for single mothers in the 1990s, together with SSDI program changes that better integrate private and public disability insurance programs along the lines of the reforms in the Netherlands, offer the best hope of improving their employment rates and economic well-being as well as reducing SSDI/SSI program growth.

KATHRYN L. MOORE, University of Kentucky College of Law
Email: kmoore@pop.uky.edu

Reform of the Social Security system appears inevitable. The only questions are how and when. This Article discusses the principles that should guide reform. It begins by describing Robert Ball's "nine guiding principles" underlying the current Social Security system. It then identifies the seven principles that should guide reform of the system. The principles call for retaining Social Security's fundamental structure but gradually introducing changes on both the revenue and benefit side so as to distribute the burden of reform widely across and within generations. Beyond that, the principles offer considerable flexibility in the final details of reform.

BRUCE DAVIS JACKSON, B. Davis Jackson, CPA
Email: djackson@harneypartners.com

Two of the most powerful critiques of the Social Security reform proposals known as Privatization were written in 1998 by Geanakoplos, Mitchell and Zeldes (see citations). The authors showed that individuals picking their own investments would seek to avoid the risk of picking a loser stock that wiped out their principal, so would wind up earning the riskless interest rate of intermediate term government bonds. This in turn required putting the full FICA rate into their account to achieve the expected benefit level, which in turn required new taxes to pay the transition debt. Since this debt would add a new layer on top of what Congress already is not repaying, it would likely carry an interest rate higher than riskless. The combination of new taxes plus market rate of interest on the transition debt completely negates the gain from earning a slightly higher return on investments. Thus, we're no better off with Privatization than under the current system.

This paper compares a new reform proposal - called Annuitizing - to the old Privatization proposals, and shows how Annuitizing overcomes the problems exposed in the critiques above. The author, in another paper devoted to that subject, shows how Annuitizing (see citation) can boost benefits to 100% wage replacement, pay off the national debt, cover the uninsured and slow down the growth rate of healthcare costs as well as quickly lead us out of the whole economic crisis.

These claims strike some people as sounding too good to be true. This paper opens the door to serious consideration of Annuitizing by showing exactly how it differs from Privatization and therefore why it achieves what the author claims for it.

ERIK HANSEN, affiliation not provided to SSRN

This article discusses the legislative history of the Social Security Protection Act of 2004 (SSPA) in detail. It includes summaries of the provisions and a chronology of the modification of these proposals as they passed through the House and Senate, and ultimately to the president's desk. With its administrative remedies and enhanced program protections, SSPA can be seen as part of the ongoing efforts to refine existing social insurance programs, ensuring a system that best meets the evolving needs of American society.