Saving Social Security: A Balanced Approach [Hardcover]

Peter A. Diamond (Author), Peter R. Orszag (Author)

Book Description

Publication Date: December 2003

While everyone agrees that Social Security is a vital and necessary government program, there have been widely divergent plans for reforming it. Peter A. Diamond and Peter R. Orszag, two of the nations foremost economists, propose a reform plan that would rescue the program both from its projected financial problems and from those who would destroy the program in order to save it. Saving Social Securitys strategy balances benefit and revenue adjustments, following the precedent set by the last major Social Security reform in the early 1980s. The authors proposal restores long-term balance and sustainable solvency to the program without imposing additional burdens on the rest of the budget. Further, it protects disability and young survivor benefits and strengthens Social Securitys protections for low earners and widows. Most important, the plan preserves the programs core social insurance role by providing a base-level of assured income to American workers and their families in time of need. To better understand the accomplishments and financial problems of Social Security, Diamond and Orszag provide background on the program, as well as on the causes of the long-term deficit. They suggest ways in which various alternative reform plans should be evaluated and explain the shortcomings of proposals to replace part of Social Security with individual accounts. Saving Social Security is essential reading for policymakers involved in reform, analysts, students, and all those interested in the fate of this safeguard of American lives.

Editorial Reviews

Review

"This book should be read by all of those interested in the future of Social Security." -- Lawrence H. Summers, Secretary of the Treasury 1999-2001

About the Author

Peter A. Diamond is an Institute Professor at the Massachusetts Institute of Technology. He has been president and chair of the board of the National Academy of Social Insurance. His recent books include Social Security Reform, The 1999 Lindahl Lectures (Oxford University Press, 2002) and Taxation, Incomplete Markets, and Social Security: The 2000 Munich Lectures(MIT Press, 2002).

Peter R. Orszag is the Joseph A. Pechman Senior Fellow in Economic Studies at the Brookings Institution and a codirector of the Tax Policy Center, a joint venture of the Urban Institute and Brookings Institution. He previously served as special assistant to the president for economic policy during the Clinton administration.

Product Details

• Hardcover: 287 pages
• Publisher: Brookings Inst Pr (December 2003)
• Language: English
• ISBN-10: 0815718381
• ISBN-13: 978-0815718383
• Product Dimensions: 9.2 x 6.2 x 1 inches
• Shipping Weight: 1.2 pounds (View shipping rates and policies)
• Average Customer Review: 3.3 out of 5 stars  See all reviews (3 customer reviews)
• Amazon Best Sellers Rank: #1,177,460 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews

8 of 11 people found the following review helpful:

5.0 out of 5 stars A highly recommended ray of hope, July 17, 2004

By 

Midwest Book Review (Oregon, WI USA) - See all my reviews

This review is from: Saving Social Security: A Balanced Approach (Hardcover)

Written by the chair of the board of the National Academy of Social Insurance and a former special assistant to the president for economic policy during the Clinton administration, Saving Social Security: A Balanced Approach Proposes a reform plan for America's social security system that would save it from both its financial problems and those who would do away with it. Focusing on means that promote long-term balance and sustainable solvency, while protecting the program's benefits for the disabled, low earners, widows, and young survivors. Exhaustively researched and deeply entrenched in practical issues and mathematical calculations, Saving Social Security is a highly recommended ray of hope against a looming national crisis.

10 of 18 people found the following review helpful:

2.0 out of 5 stars Only Balanced on the High End, January 3, 2005

By 

S. Mathys "wannabe" (Indianapolis, IN USA) - See all my reviews
(REAL NAME)   

This review is from: Saving Social Security: A Balanced Approach (Hardcover)

First, the good things. This text gives a general understanding of how the 75-year projection has gone from on-balance in 1983 to off-balance in 2003, it provides many examples of possible errors in the system, and it gives good recommendations to the current system to enhance the ability of Social Security to remain in balance once it has been restored, namely things like adjusting retiree benefits for changes in expected life span over and above projected changes and including a universal legacy charge which does not eliminate the legacy cost but, rather, creates a stable legacy cost over time such that the cost of the system is being borne by all rather than only one generation (ours!). These earn the book 4 stars.

The authors state in chapter 3 their five goals for Social Security reform: "restor[e] Social Security to a sound financial footing, reduc[e] the future burden from Social Security on the rest of the Federal Budget, shar[e] the ongoing costs of the program's past generosity in a fair manner, preserv[e] and strenghten the program's social insurnace function,s and ensur[e] that, on balance, the changes enhance the overall performance of the economy." Given that the current 75-year projection by the Office of the Chief Actuary now shows a 1.9% of payroll imbalance, the authors contend that this imbalance should be corrected by not just revenue increases (higher payroll taxes, new estate taxes, or a non-renewal of the 2001 and 2003 tax cuts) or benefit reductions, but both. In fact, this is the type of balance they propose - that all parties should share in the costs of the system equally. This "all parties" mentality leads them to include those state and local government workers currently not covered by the program, but conveniently (or maybe politically correctly) leads them to EXCLUDE all current retirees and near-retirees (those retiring in the next 10 years or so). The "all parties" mentality also belies their obvious disdain for the higher-earning cohorts of the country, in that many of the balance reforms do not balance reductions in benefits across all earnings groups with tax increases across those same groups, but mostly balances the increased revenue from taxing higher-wage earners more with decreasing benefits to those same high-wage earners through incrasing the "progressivity" of benefits. Such inconsistency in comparing apples to apples (for example, continually discussing the 2001 and 2003 tax cuts and options to reinstate those taxes as revenues dedicated to Social Security, when in fact these tax cuts are outside the scope of Social Security, and should have stayed there throughout the whole text) as the authors like to say they are doing causes them to lose 2 stars.

Overall, this book provides both positive analysis and negative inclusion of meaningless comparison. It is good for background to understand what the dilemma is truly about, but their whole package will probably not be, and should not be, implemented, though certain specific parts are appropriate.

5 of 32 people found the following review helpful:

3.0 out of 5 stars Should we keep Social Security limping along?, February 23, 2005

By 

Peter Simmons, author, The Next Crash - See all my reviews

This review is from: Saving Social Security: A Balanced Approach (Hardcover)

The authors do a passable job of explaining how Social Security has gotten to where it is.

Unfortunately, they never discuss what Social Security is.

Social Security is an intergenerational welfare program. Money is taken from the young, and given to retirees.

We can "Save Social Security" - by increasing taxes, reducing benefits, and using all sorts of accounting tricks.

But should we?

Retirees are living in comfort - while young people are being paid less and are struggling to survive.

Retirees have health insurance - while young people are likely to have none.

Social Security has lasted as long as it has because people saw it as a good deal - you got more out of it than you paid in.

Young people know that this is no longer true. They see no armies of children to support them in their old age. To pay for their retirement and medical costs.

What the authors suggest is that we continue to force young people to pay for retirees to live in comfort and health.

This means that young people will be forced to work until they drop. Every moment of their lives, they will live in fear that a medical emergency will drop them into the financial abyss.

And they will see retirees living in comfort and health - taking vacations, clogging the roads with their RV's.

This doesn't sound fair to me - or to the young people under 45 I talk to.

Does it sound fair to you?

Peter Simmons Author - The Next Crash