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December 20, 2014

Homework Help: Economics

Posted by Mariah on Friday, November 17, 2006 at 4:35pm.

The chapter states that the elderly population in the United States is growing more rapidly than the total population. In particular, the number of workers is rising slowly, while the number of retirees is rising quickly. Concerned about the future of Social Security, some members of Congress propose a “freeze” on the program.

If the benefits per retiree were frozen, what would happen to total expenditures? To tax payments per worker?

I would think that the total expenditures would go up as well as the tax payment per worker. Is this correct?

One important factor is missing here, the trillions of dollars that S.S. holds in reserve currently that acts a as buffer to fluctuations in the worker/retieree ratio.

total expenditures will rise until the number of retiring people is less than deaths.

tax payments per worker are independent of payment and so a freeze should have no effect on them.

If there were no reserve, the payments per worker would be raised by congress, probably.

the S.S. accounting office expects to have a surpluss until 2075

Mariah.
I think you are correct.

If tax payments per worker were frozen, what would happen to total expenditures

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