E M P L O Y E E B E N E F I T S , C O M P E N S A T I O N
& P E N S I O N L A W
Vol. 5, No. 15: August 12, 2004
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Publisher: LSN Employment, Labor, Compensation & Pension Journals
a division of
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Editor: PAMELA PERUN
Urban Institute
Mailto:pamela@planetnow.com
Copyright: SSEP, Inc. 2004. All rights reserved.
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Topic of This Issue:
Social Security
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T A B L E of C O N T E N T S
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NEW and FORTHCOMING ARTICLES
"Social Security and Marriage in Black and White"
Ohio State Law Journal, Vol. 65, 2004
DOROTHY ANDREA BROWN
Washington and Lee University School of Law
"The Long-Run 'Cost' of Tax Cuts"
Tax Notes, Vol. 104, No. 3, July 19, 2004
BRIAN H. JENN DONALD B. MARRON
University of Chicago
"Increasing the Early Retirement Age under Social Security:
Health, Work, and Financial Resources"
Health and Income Security, No. 7, December 2003
MICHAEL V. LEONESIO VIRGINIA P. RENO
National Academy of Social Insurance (NASI)
DENTON R. VAUGHAN
U.S. Census Bureau
WORKING PAPERS
"A Summary of Saving Social Security: A Balanced Approach"
PETER A. DIAMOND
Massachusetts Institute of Technology (MIT)
Department of Economics
National Bureau of Economic Research (NBER)
PETER ORSZAG
The Brookings Institution
Sebago Associates
"Can Faster Growth Save Social Security?"
RUDOLPH PENNER
Urban Institute
"Social Security Finances: Findings of the 2004 Trustees Report"
VIRGINIA P. RENO
National Academy of Social Insurance (NASI)
NELLY GANESAN
National Academy of Social Insurance (NASI)
"The Effect of Social Security on Divorce and Remarriage
Behavior"
STACY DICKERT-CONLIN
Syracuse University
Center for Policy Research
CRISTIAN MEGHEA
Syracuse University
Center for Policy Research
S S R N I N F O R M A T I O N
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N E W and F O R T H C O M I N G Articles
_________________________________________________________________
"Social Security and Marriage in Black and White"
Ohio State Law Journal, Vol. 65, 2004
BY: DOROTHY ANDREA BROWN
Washington and Lee University School of Law
Paper ID: Washington & Lee Public Law Research Paper No. 04-07
Contact: DOROTHY ANDREA BROWN
Email: Mailto:brownda@wlu.edu
Postal: Washington and Lee University School of Law
Sydney Lewis Hall
Lexington, VA 24450 UNITED STATES
Phone: 540-458-8192
Fax: 540-458-8488
ABSTRACT:
Social security benefits are available for individuals and their
spouses. Spousal benefits, however are subject to certain limits
where spouses also work in the paid labor market. Social
security benefits are the greatest for spouses who do not work
in the paid labor market and are the least for spouses who
contribute roughly half of their household income.
Social security benefits also are available for surviving
spouses. Surviving spousal benefits are reduced for dual wage
earner couples. Surviving spousal benefits are the greatest for
spouses who do not work in the paid labor market and are the
lowest where wives contribute roughly half of their household
income. Census Bureau data shows that African-American wives are
more likely than White wives to contribute roughly half of their
household income. As a result, African-American wives are more
likely than White wives to be penalized by the social security
limitations placed on dual wage earner couples. This article
should encourage scholars who are interested in examining how
African-Americans fare under our current social security system
to include married African-American couples in their analysis.
______________________________
"The Long-Run 'Cost' of Tax Cuts"
Tax Notes, Vol. 104, No. 3, July 19, 2004
BY: BRIAN H. JENN DONALD B. MARRON
University of Chicago
Contact: BRIAN H. JENN
Email: not available
Postal:
Co-Auth: DONALD B. MARRON
Email: Mailto:DONALD.MARRON@GSB.UCHICAGO.EDU
Postal: University of Chicago
1101 East 58th Street
Chicago, IL 60637 UNITED STATES
ABSTRACT:
Some recent analyses have claimed that the 75-year cost of
extending the 2001 and 2003 tax cuts is as large as the funding
imbalances in Social Security and Medicare. This article takes a
critical look at these analyses and finds them flawed and
misleading. Previous analyses have relied on extreme assumptions
about the acceptable level of future taxes and, as a result,
have overstated the long-run revenue costs of extending the tax
cuts, likely by a factor of 10 or more. The long-run cost of
extending the tax cuts is not remotely comparable to the
long-run imbalances in the leading entitlement programs.
______________________________
"Increasing the Early Retirement Age under Social Security:
Health, Work, and Financial Resources"
Health and Income Security, No. 7, December 2003
BY: MICHAEL V. LEONESIO VIRGINIA P. RENO
National Academy of Social Insurance (NASI)
DENTON R. VAUGHAN
U.S. Census Bureau
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=555627
Contact: MICHAEL V. LEONESIO
Email: Mailto:Michael.V.Leonesio@ssa.gov
Postal:
Co-Auth: VIRGINIA P. RENO
Email: Mailto:vreno@nasi.org
Postal: National Academy of Social Insurance (NASI)
1776 Massachusetts Avenue, NW
Suite 615
Washington, DC 20036-1904 UNITED STATES
Co-Auth: DENTON R. VAUGHAN
Email: not available
Postal: U.S. Census Bureau
Washington, DC 20233 UNITED STATES
ABSTRACT:
Policies that would reduce or eliminate Social Security benefits
for early retirees could have adverse consequences for older
workers in poor health. This Brief documents the health and
financial status of people aged 62-64 who receive reduced Social
Security benefits as retired workers, spouses, and widowed
spouses. Although most of these early retirees do not have a
serious health condition, almost half report some type of health
problem. About 25 percent are estimated to have health problems
that substantially impair their ability to work. When compared
to other early retirees, those who have severe health problems
have lower lifetime earnings, are more reliant on Social
Security benefits, have fewer financial assets, and are less
likely to have health insurance. About 12 percent of early
retirees are estimated to meet the strict disability criteria
for receiving Social Security Disability Insurance (DI) or
Supplemental Security Income (SSI). Many of them do not receive
DI because they lack sufficient work histories to qualify.
Another larger subgroup does not meet the test of low income and
limited financial assets for means-tested SSI disability
benefits. About as many 62-64 year olds classified as severely
disabled receive early retirement benefits as receive disability
benefits from DI or SSI. The evidence suggests that Social
Security early retirement benefits serve as a substantial,
albeit unofficial, disability program for some early retirees.
______________________________
W O R K I N G P A P E R Abstracts
_________________________________________________________________
"A Summary of Saving Social Security: A Balanced Approach"
BY: PETER A. DIAMOND
Massachusetts Institute of Technology (MIT)
Department of Economics
National Bureau of Economic Research (NBER)
PETER ORSZAG
The Brookings Institution
Sebago Associates
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=544244
Paper ID: MIT Department of Economics Working Paper No. 04-21
Date: May 2004
Contact: PETER A. DIAMOND
Email: Mailto:pdiamond@mit.edu
Postal: Massachusetts Institute of Technology (MIT)
Department of Economics
Room E52-344
50 Memorial Drive
Cambridge, MA 02142 UNITED STATES
Phone: 617-253-3363
Fax: 617-253-7804
Co-Auth: PETER ORSZAG
Email: Mailto:PORSZAG@BROOK.EDU
Postal: The Brookings Institution
Economic Studies
1775 Massachusetts Ave. NW
Washington, DC 20036-2188 UNITED STATES
ABSTRACT:
This paper reviews the financial position of Social Security,
presents a plan for saving it, and discusses why Social Security
revenue should not be diverted into individual accounts. Our
approach preserves the value of Social Security in providing a
basic level of benefits for workers and their families that
cannot be decimated by stock market crashes or inflation, and
that lasts for the life of the beneficiary; it increases
benefits for some particularly needy groups such as those who
have worked at low pay over long careers and widows and widowers
with low benefits; it eliminates the long-term deficit in Social
Security without resorting to accounting gimmicks, thereby
putting the program and the federal budget on a sounder
financial footing. Our plan combines revenue increases and
benefit reductions - the same approach taken for reaching a
consensus in the last major Social Security reform in 1983.
JEL Classification: H550
______________________________
"Can Faster Growth Save Social Security?"
BY: RUDOLPH PENNER
Urban Institute
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=493804
Paper ID: Boston College, Center for Retirement Research Working
Paper
Date: December 2003
Contact: PETER A. DIAMOND
Email: Mailto:pdiamond@mit.edu
Postal: Massachusetts Institute of Technology (MIT)
Department of Economics
Room E52-344
50 Memorial Drive
Cambridge, MA 02142 UNITED STATES
Phone: 617-253-3363
Fax: 617-253-7804
Paper Requests:
Contact Amy Chasse, Communications Specialist, Center for
Retirement Research, Boston College, Fulton Hall 550, Chestnut
Hill, MA 02467-3808. Phone: (617)552-6783. Fax: (617)552-1750.
Mailto:chassea@bc.edu
ABSTRACT:
Numerous commissions, individual researchers, and the Trustees
of the Social Security system agree that the current Social
Security system is not sustainable. The 2003 Trustees' report
forecasts that the program's two trust funds (Old Age and
Survivors Insurance and Disability Insurance) will be empty in
2042. After 2042, Social Security taxes would only cover about
70 percent of projected benefit costs. Even before the trust
funds are exhausted, the combination of rapidly growing Social
Security, Medicare, and Medicaid spending is likely to create
intolerable budget pressures that will force major changes in
policy.
The problem lies in demography. The economic burden imposed by
these pay-as-you-go programs depends on the number of
beneficiaries and the level of benefits that they have been
promised. The economic resources available to the programs
depend on the number of taxpayers and their ability and
willingness to pay taxes. The population of elderly
beneficiaries will soar in the future because of increased life
expectancy and the retirement of baby boomers - the first
boomers will apply for Social Security pensions in 2008.
Meanwhile, the population of workers paying payroll taxes will
stagnate because of low birth rates experienced since the early
1960s.
Although there is a broad consensus that the Social Security
system is in trouble, a few dissenters argue that the Trustees
are too pessimistic about future economic growth. The dissenters
believe that a more realistic growth assumption would allow the
trust funds to remain financially sound far longer than now
expected. This brief will examine the implications of more rapid
economic growth for Social Security and the federal budget as a
whole, including a discussion of both the direct and indirect
effects of growth.
JEL Classification: J10
______________________________
"Social Security Finances: Findings of the 2004 Trustees Report"
BY: VIRGINIA P. RENO
National Academy of Social Insurance (NASI)
NELLY GANESAN
National Academy of Social Insurance (NASI)
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=552242
Date: March 2004
Contact: VIRGINIA P. RENO
Email: Mailto:vreno@nasi.org
Postal: National Academy of Social Insurance (NASI)
1776 Massachusetts Avenue, NW
Suite 615
Washington, DC 20036-1904 UNITED STATES
Phone: 202-452-8097
Fax: 202-452-8111
Co-Auth: NELLY GANESAN
Email: Mailto:nganesan@nasi.org
Postal: National Academy of Social Insurance (NASI)
1776 Massachusetts Avenue, NW
Suite 615
Washington, DC 20036-1904 UNITED STATES
ABSTRACT:
Social Security pays monthly benefits to retired and disabled
workers, to their families, and to the families of deceased
workers. Benefits and the administrative costs of the program
are paid from the Social Security trust funds. The funds receive
income from Social Security taxes paid by workers and matched by
their employers; from income taxes that beneficiaries pay on
their benefit income; and interest earnings on the trust funds'
reserves. The Social Security Act establishes a Board of
Trustees to oversee the management and investment of the trust
funds, and requires it to report annually to Congress and the
public on the financial status of the funds. The report is
prepared by the Office of the Chief Actuary of the Social
Security Administration.
______________________________
"The Effect of Social Security on Divorce and Remarriage
Behavior"
BY: STACY DICKERT-CONLIN
Syracuse University
Center for Policy Research
CRISTIAN MEGHEA
Syracuse University
Center for Policy Research
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=546244
Paper ID: Boston College, Center for Retirement Research Working
Paper No. 2004-09
Date: April 2004
Contact: STACY DICKERT-CONLIN
Email: Mailto:SDICKERT@MAXWELL.SYR.EDU
Postal: Syracuse University
Center for Policy Research
Syracuse, NY 13244 UNITED STATES
Phone: 315-443-3232
Fax: 315-443-1081
Co-Auth: CRISTIAN MEGHEA
Email: Mailto:cmeghea@maxwell.syr.edu
Postal: Syracuse University
Center for Policy Research
Syracuse, NY 13244 UNITED STATES
Paper Requests:
Contact Amy Chasse, Communications Specialist, Center for
Retirement Research, Boston College, Fulton Hall 550, Chestnut
Hill, MA 02467-3808. Phone: (617)552-6783. Fax: (617)552-1750.
Mailto:chassea@bc.edu
ABSTRACT:
This paper investigates the effects of economic incentives on
divorce and remarriage behavior. Before December 1977, the
Social Security law entitled divorcees to claim auxiliary
benefits on their ex-spouse's record only if the marriage lasted
at least 20 years. One of the 1977 amendments of the Social
Security rules shortened the minimum duration of an "eligible"
marriage to ten years. Following the passage of the law, we find
that the divorce rate at nine years of marriage decreased
relative to a control group. However, there is not strong
evidence of a corresponding increase in the divorce rate at ten
years of marriage. We also find no evidence that the new claim
on future Social Security benefits affected divorced women's
remarriage probability in the predicted way.