کاهش معضل جمعیتی امریکا به وسیله بودجه قبلی تامین اجتماعی

Financing Social Security benefits at current levels implies significant increases in payroll taxes within the next 20 years under current US demographic developments. Using a general-equilibrium overlapping-generations model with realistic patterns of fertility and lifespan extension, this study shows that future generations would be harmed during the demographic transition due to rising payroll taxes, which crowd out savings and slow real wage growth below the rate of technological progress. A faster rate of technological progress would mitigate only some of the payroll tax increase and its economic consequences but could not overcome them. Addressing the financing problem by reducing Social Security benefits as needed or by raising the eligibility age for benefits imposes major welfare losses on current or near term retirees. By contrast, a pre-funding of Social Security financed with consumption taxes more evenly spreads the welfare losses across generations, and it helps future generations, especially the poor, by stimulating capital formation.

How will the United States economy fare in 30 years when 77 million baby boomers will have retired? By that time, twice the number of elderly will rely on only 18% more workers for financial support primarily delivered through Social Security and Medicare. Based on “intermediate” economic and demographic assumptions, the government's Trustees project that Social Security is one-sixth short of the resources needed to pay benefits over the next 75 years. These estimates, though, understate the long-run problem: extending the projection horizon beyond 75 years doubles this shortfall.1 Medicare, which provides health care to retirees, faces even larger long-run shortfalls.2 Eliminating the imbalances in both programs beyond the 75-year horizon and without reducing benefits would require doubling the payroll taxes levied on employees and employers, thereby reducing labor supply incentives. These demographic forecasts, however, are partial equilibrium calculations and, therefore, may miss important general equilibrium effects during the demographic transition. An aging society could theoretically benefit from accelerated real wage growth as the number of retirees with capital rises relative to the number of workers supplying labor (Auerbach et al., 1989; Bohn, 2001). Accelerated real wage growth could then limit the payroll tax increases necessary to balance Social Security. However, this process is not guaranteed since the larger payroll taxes also reduce the potential for saving and thus limit capital formation and growth. Using a new general-equilibrium life-cycle model, this paper analyzes the economic impact of demographic changes and explores the economic and welfare impact of potential reforms. This study builds on the literature that followed Feldstein's (1974) article contending that Social Security lowers national saving, including Kotlikoff (1979), Auerbach and Kotlikoff (1983), and Seidman (1986). More recent papers have considered the importance of land, earnings uncertainty, political economy considerations, liquidity constraints and different options for funding Social Security. These studies include Hubbard and Judd (1987), Imrohoroglu et al., 1995 and Imrohoroglu et al., 1999, Kotlikoff (1996), Huang et al. (1997), Huggett and Ventura (1999), Cooley and Soares, 1999a and Cooley and Soares, 1999b, De Nardi et al. (1999), Kotlikoff et al., 1998a, Kotlikoff et al., 1998b, Kotlikoff et al., 1999 and Kotlikoff et al., 2002, Raffelhüschen, 1989 and Raffelhüschen, 1993, Bohn (2001) and Smetters and Walliser (2004). While the model herein builds on the model of Auerbach and Kotlikoff (1987), it adds five important features for studying the impact of demographic changes: (i) more realistic demographics that allows the model to better capture the population-age distribution and distribution of inheritances, (ii) cohort-specific longevity to reflect the important impact of rising longevity on the age distribution, (iii) multiple earnings groups within each cohort to capture the impact that reforms have on different lifetime income groups,3 (iv) the ability to simulate the model from non steady-state initial conditions in order to start with the prevailing age and wealth distribution, and (v) a close calibration of the model to US fiscal conditions and institutions. The paper by De Nardi et al. (1999) is the closest antecedent to ours. Their model includes demographic change as well as idiosyncratic shocks to earnings and longevity. It is limited, though, to quadratic preferences, omits most of the other US tax and transfer programs, lacks intra-generational heterogeneity as well as consumption by children, and distributes all bequests at the beginning of adulthood. Their baseline simulation, like ours, shows a major increase over time in payroll tax rates but their model implies long-run payroll tax increases that are larger than ours. Under our baseline simulation, where taxes rise to maintain Social Security benefits, macroeconomic conditions exacerbate rather than mitigate fiscal problems. Capital formation and saving is constrained by the rising payroll tax, and wage growth slows below the rate of technological change. The slow-down in wage growth requires further tax increases to maintain real government spending, which we assume to rise with economic productivity and the size of the population. A faster rate of technical progress relative to our baseline would expand the wage base at a faster rate and somewhat mitigate payroll tax increases. But it would still leave a major problem under current law since Social Security benefits at retirement are linked to average wage growth. As an alternative to increasing tax rates, we consider several reforms including reducing benefits as needed over time as well as increasing the retirement age. Our simulations show that these potential reforms impose major welfare losses on current or near term retirees. Finally, we also simulate pre-funding Social Security by paying off the implicit liabilities of current and future workers accrued under the existing system with a tax levied on either wages or consumption. Such pre-funding in our model is not tied to any particular institutional savings arrangements since agents are not liquidity constrained and thus simply implement their own optimal consumption and savings paths. Thus, pre-funding in our model could be interpreted either as a mandatory government-run fully funded pension system—with workers adjusting their own savings outside the system to achieve their optimal savings path—or a system where agents simply save on their own behalf. We show below that, while pre-funding is far from being a free lunch for living generations, it spreads the pain more evenly than the other options and entails major welfare gains for future generations, particularly those with very low incomes. The paper is organized as follows. Section 2 presents our model and calibration, paying particular attention to how we incorporate fertility and lifespan extension. Section 3 presents our baseline simulations under the demographic transition as well as the macroeconomic results from different potential reforms, including reducing scheduled benefits over time and pre-funding Social Security. The welfare implications of these reforms across generations and between income classes within generations are then discussed in Section 4. Section 5 concludes.

Our simulation model tracks the nation's aging process well. Although it abstracts from several features of economic reality, it gives new insights into the general equilibrium feedback effects of the demographic transition. The sharp run-up in the payroll tax over the next three generations under the baseline reduces saving and slows the growth of real wages below the rate of technological change. Preventing payroll taxes from dramatically rising by reducing Social Security’ scheduled benefits would impose major welfare losses on middle-aged and older generations alive at the time of the reform. As an alternative to reducing scheduled benefits, we also examine the option to pre-fund retirement saving. Our simulations show that it could avoid the payroll tax hikes and generate major benefits for future generations. However, paying off the accrued liabilities of the old system imposes burdens on generations alive at the time of the reform. Still, the welfare losses tend to be spread out much more evenly between generations and produce much larger long-run gains relative to either the baseline or relative to cutting scheduled benefits. The economic benefits of pre-funding for future generations arise more quickly under consumption- than wage-tax finance, however, at the cost of somewhat higher welfare losses for middle-aged generations. Our model could be questioned because of its stylized nature. It abstracts from the choice of education (see Heckman et al., 1998), uncertainty, international trade, monetary policy, borrowing constraints, and a number of other aspects of economic reality. Whether the inclusion of those factors would materially alter our conclusions is a question for future research. However, we believe that the pending demographic change is severe enough that most models of the economy would generate a similar fiscal dilemma.