Deck 9: What Is the Future for Social Security

Question 1

Which of the following solutions do Diamond and Orszag propose to address the effect of earnings inequality on Social Security?

A) Raise the maximum taxable earnings base
B) Reduce benefits for relatively high wage earners
C) Create personal savings accounts to enable workers to have more control over their Social Security taxes
D) All of the above
E) A and B above

Answer 1

E

Question 2

The most recent report from the Trustees of the Social Security system expects the system to be able to pay full benefits until ______, and after that, pay 80% percent of benefits, even if nothing is done to change the system.

A) 2015
B) 2034
C) 2045
D) 2052
E) 2060

Answer 2

B

Question 3

One criticism of Social Security is that benefits do not keep pace with inflation.

Answer 3

False

Question 4

The income threshold for taxing Social Security benefits for individuals is ______.

A) $5,000
B) $19,999
C) $25,000
D) $29,999
E) None of the above

Question 5

The "baby bust" generation does not have enough workers to contribute promised benefits to the "baby boom" generation upon its retirement.

Question 6

When did Congress recognize that Social Security could no longer operate in the future as a purely pay-as-you-go system?

A) In the 1930s
B) In the 1950s
C) In the 1980s
D) In the 1990s
E) None of the above

Question 7

Social Security was never intended to be the sole source of income for people in retirement.

Question 8

Which of the following is a benefit of personal accounts, according to Ponnuru?

A) Personal accounts would give people wealth to pass on to their heirs
B) Personal accounts would move Social Security from a "pay-as-you-go" system to a "pre-funding model"
C) Personal accounts would enable people to supplement reduced Social Security benefits with wealth built up in their accounts
D) All of the above
E) A and B above

Question 9

It is projected that starting in 2024, expenditures will begin to exceed revenues, and the robust reserves will need to be drawn down to pay benefits.

Question 10

The Social Security trust fund holds personal savings account for individual workers for their own Social Security benefits.

Question 11

By 2030, Social Security and Medicare are projected to total 50% of the federal budget.

Question 12

Which of the following is the major problem with Social Security according to Ponnuru?

A) When benefits paid out begin to exceed revenues, the government will have to find money to pay off the IOUs in the trust fund
B) Benefits do not rise in exact proportion to wages
C) Benefit cuts and tax increases are not balanced
D) All of the above
E) A and B above

Question 13

The Social Security tax is a heavier burden for people earning more money than those who are at the poverty level.

Question 14

Controversies around Social Security focus on which of the following questions?)

A) How much taxes should be paid
B) What level of benefits should be paid for those who are retired
C) Whether or not older adults should receive governmental subsidies
D) Both A and B
E) Both A and C

Question 15

Which of the following factors contributes to the long-term deficit in Social Security, according to Diamond and Orszag?

A) Improvements in life expectancy
B) Increased earnings inequality
C) The generosity of benefits to early beneficiaries
D) All of the above
E) A and B above

Question 16

Social Security is an example of a progressive tax.

Question 17

The Social Security Act of 1935 was a response to the Great Depression at a time when only 5% of the U.S. population was over age 65.

Question 18

The age of eligibility for full Social Security benefits was ______, but between 2002 and 2007 rose to ______.

A) 62, 65
B) 62, 70
C) 65, 67
D) 65, 70
E) 67, 70

Question 19

Even though Social Security benefits are derived from taxation, they are subject to taxation.

Question 20

What happens to the surplus payroll taxes generated by Social Security?

A) The surplus money is deposited into individual workers' personal savings accounts
B) The surplus money is used to buy U.S. Treasury notes
C) The surplus money is deposited into supplemental retirement accounts for current beneficiaries
D) The surplus money is deposited into the General Fund
E) None of the above

Question 21

According to Ponnuru, even if economic growth doubled, Social Security would still become insolvent if nothing is done to change the program's benefit structure.

Question 22

Steuerle and Favreault argue that the debate over Social Security is mainly about whether individual workers should be allowed to place some of their retirement money into individual accounts.

Question 23

Thompson argues that the age increase from 65 to 67 in the Social Security program will cause more benefits to fall below minimally adequate levels of support.

Question 24

According to Ponnuru, setting up personal accounts in Social Security would not increase the federal deficit.

Question 25

What can be done to improve the financial health of Social Security? Describe the benefits and drawbacks of the major proposals to change Social Security as outlined in the reading, "The Future of Social Security: Proposals You Should Know About."

Question 26

How does Social Security embody the principles of equity and adequacy? How would this balance be affected by changing Social Security into a privatized system?

Question 27

According to Steuerle and Favreault, the inequities in Social Security are largely being ignored in current debates about changing the system.

Question 28

Steuerle and Favreault argue that it is possible to implement reforms in Social Security such that everybody wins.

Question 29

Do you agree or disagree with Steuerle and Favreault who argue that Social Security should be restructured to better reflect the various configurations of today's families? Explain.

Question 30

According to Steuerle and Favreault, Social Security reflects outdated norms of family life.

Question 31

The majority of people polled about the future of Social Security are confident that it will be around when they need it.

Question 32

The legacy debt refers to the excess Social Security benefits paid to early beneficiaries who contributed minimal payroll taxes.

Question 33

How does Social Security benefit younger age groups and not just older age groups?

Question 34

Describe how Social Security is a "pay-as-you-go" system. How do dependency ratios help us project future contributions to and payouts from Social Security? Can Social Security continue to run as a purely pay-as-you-go system in the future? Explain.

Question 35

According to Thompson, the only way to ensure the continued solvency of Social Security is to reduce benefits.

Question 36

Diamond and Orszag argue that all of the adjustments for increased life expectancy should be made to Social Security by reducing benefits.

Question 37

Do you agree or disagree with Ponnuru's proposal for improving the solvency of Social Security? Explain.

Question 38

According to Thompson, the hypothetical average worker used in most discussions of Social Security policy receives a benefit that is substantially higher than that of actual retirees.

Question 39

Discuss Diamond's and Orszag's strategies for improving the solvency of Social Security. Do you agree or disagree with their proposal?