Social Security: Economists' Perspectives: Difference between revisions
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Milton Freidman | ==Milton Freidman== | ||
Revision as of 01:07, 4 December 2006
Martin Feldstein
http://www.nber.org/feldstein/photo/marty7.jpg
- Graduated from Havard College and Oxford university.
- Published over 300 economic research articles.
- He was the chief economic advisor for President Regan and was chairman of the council of economic advisers from 1982 through 1984.
- In 2004, he served as President of the American Economic Association.
- He is now a professor of Economics at Harvard University and President of the National Bureau of Economic Research.
- Bush appointed him to his foreign intelligence advisory board in 2006.
Traditionally, Feldstein has be a strong advocate of privatizing social insurance.
- In 1997, He described the problem of the aging population and therefore, the higher government costs for pensions and medical care. This is because the S.S. system is a pay-as-you-go system. It pays for the transfers by taxing the current workers. So, in effect we are paying for our parents to retire and our children would in effect pay for our retirement.
- He estimated that Gov. spending would increase from 10% of GDP to 18% in 2030. \
- The program will begin to run in the red in 2017.
- To pay for that 18% by raising taxes would require the equivalent of doubling the personal income tax or raising the payroll tax rate from 15% to more than 35%.
- So, he supports the idea of only taking 2% of people’s salary and putting it in into investments similar to that of people’s 401(k) retirement funds. This would provide the same amount as raising the payroll tax.
- This type of system has already been successful in many South American countries and also in many European countries.
- Lately, he has commented on President Bush’s approach to S.S. reform.
- He understands that there would need to a phasing in of this privatization system, but he also shows that components of privatization could be used to supplement the current pay as you go system.
- There would be a voluntary add-on tax that would be put in personal accounts and make up the difference between the decline in abilities for S.S. to pay out benefits.
