Budgeting for Social Security Or: When Are Savings Really Savings?

Policy and budgetary debate about Social Security is greatly affected by understandings of how the program is financed and, therefore, what steps would make it more affordable in the future. Unfortunately, both the standard justifications for and criticisms of buildups in the Social Security trust funds do not reflect the extent to which such buildups in fact would help finance future program costs. This article argues for a different standard, based explicitly on the fiscal capacity of the federal government and the effect of the government's obligations to pay interest on that capacity. I explain how both this definition of the role of the trust funds, and a broader understanding of fiscal capacity, would affect analysis of Social Security's condition and of possible reforms.     

Book review

Wildavsky, Aaron. Speaking Truth to Power: the art and craft of policy analysis, little, Brown, and Company, Boston and T oronto, 1979, 431 pp. $12.00.