Question A:
The Trustees of the U.S. Social Security system currently estimate that the OASI trust fund will be exhausted in 2033, after which substantial benefit cuts are mandated without a change in the law.
The response to the impending exhaustion of the OASI trust fund is likely to rely more on general government borrowing than on increases in social security taxes or reductions in social security benefits.
Responses
Responses weighted by each expert's confidence
Question B:
As in the most recent major change in Social Security finances (adopted in 1983), the most prudent way to address the impending exhaustion of the OASI trust fund would feature a balanced combination of payroll tax increases and reductions in the benefits received for any given retirement age.
Responses
Responses weighted by each expert's confidence
Question A Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
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 Daron Acemoglu |
MIT | Bio/Vote History | ||
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Currrently, yes, borrowing looks more likely. But political economy can change a lot within the next ten years.
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 Mark Aguiar |
Princeton | Bio/Vote History | ||
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 Joseph Altonji |
Yale | Bio/Vote History | ||
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 Alan Auerbach |
Berkeley | Bio/Vote History | ||
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 David Autor |
MIT | Bio/Vote History | ||
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 Abhijit Banerjee |
MIT | Bio/Vote History | ||
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 Dirk Bergemann |
Yale | Bio/Vote History | ||
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 Marianne Bertrand |
Chicago | Bio/Vote History | ||
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 Markus Brunnermeier |
Princeton | Did Not Answer | Bio/Vote History | |
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 Judith Chevalier |
Yale | Bio/Vote History | ||
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 David Cutler |
Harvard | Bio/Vote History | ||
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 Darrell Duffie |
Stanford | Bio/Vote History | ||
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Politics.
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 Aaron Edlin |
Berkeley | Bio/Vote History | ||
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 Barry Eichengreen |
Berkeley | Bio/Vote History | ||
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"More than" is uncertain. I would expect increases in social security taxes (lifting the income cap significantly) as well as use of general revenues. In what combination is hard to say.
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 Liran Einav |
Stanford | Bio/Vote History | ||
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 Ray Fair |
Yale | Bio/Vote History | ||
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 Edward Glaeser |
Harvard | Bio/Vote History | ||
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 Pinelopi Goldberg |
Yale | Did Not Answer | Bio/Vote History | |
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 Michael Greenstone |
University of Chicago | Bio/Vote History | ||
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 Oliver Hart |
Harvard | Bio/Vote History | ||
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 Bengt Holmström |
MIT | Bio/Vote History | ||
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 Caroline Hoxby |
Stanford | Bio/Vote History | ||
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This is a political question, and I do not think that economists should answer such questions unless they are political economists.
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 Hilary Hoynes |
Berkeley | Bio/Vote History | ||
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 Erik Hurst |
Chicago Booth | Bio/Vote History | ||
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 Kenneth Judd |
Stanford | Bio/Vote History | ||
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Borrowing would push debt levels to unprecedented, and dangerous, levels. It is possible that something will happen that triggers a lack of confidence in the safety of US debt and massive changes in spending in general.
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 Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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Tough problem. At some point, will need to rationalize benefits. Should reflect fact that the world is different from 90 years ago when SS started. Should reflect increased life expectancy. Should reflect inflation (which it did initially) rather than wage growth.
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 Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
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There seems to be no political will for making difficult fiscal choices. (What's the most rare species in DC? Answer: Fiscal Hawks).
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 Pete Klenow |
Stanford | Bio/Vote History | ||
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This seems like a political forecast about economic policy.
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 Jonathan Levin |
Stanford | Bio/Vote History | ||
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 Eric Maskin |
Harvard | Did Not Answer | Bio/Vote History | |
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 William Nordhaus |
Yale | Bio/Vote History | ||
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Not unlikely given current deficit stance.
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 Maurice Obstfeld |
Berkeley | Bio/Vote History | ||
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 Parag Pathak |
MIT | Bio/Vote History | ||
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 Larry Samuelson |
Yale | Bio/Vote History | ||
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It has become extremely difficult politically to either raise taxes or cut benefits.
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 José Scheinkman |
Columbia University | Did Not Answer | Bio/Vote History | |
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 Richard Schmalensee |
MIT | Bio/Vote History | ||
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Not an economic question.
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 Fiona Scott Morton |
Yale | Bio/Vote History | ||
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 Carl Shapiro |
Berkeley | Bio/Vote History | ||
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 Robert Shimer |
University of Chicago | Bio/Vote History | ||
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 Stefanie Stantcheva |
Harvard | Bio/Vote History | ||
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 James Stock |
Harvard | Bio/Vote History | ||
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 Nancy Stokey |
University of Chicago | Bio/Vote History | ||
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 Chad Syverson |
Chicago Booth | Bio/Vote History | ||
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 Richard Thaler |
Chicago Booth | Bio/Vote History | ||
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Predicting anything about what the next government will do is a fool's errand. But for any government is likely to try to minimize the *perceived* pain of any changes, so I'd bet on gradual increase in "full retirement age" and gradual increase in the tax cap plus can kicking.
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 Christopher Udry |
Northwestern | Bio/Vote History | ||
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I am very confident that I have little ability to predict U.S. government response to most policy challenges.
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Question B Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
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Daron Acemoglu |
MIT | Bio/Vote History | ||
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I would be against payroll tax increases. Payroll taxes already favor automation ahead of hiring and training workers. Further increases would make that worse. We should find ways of reducing payroll taxes, especially for low-pay workers.
-see background information here |
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Mark Aguiar |
Princeton | Bio/Vote History | ||
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Joseph Altonji |
Yale | Bio/Vote History | ||
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The benefit reductions and tax increases should be targeted toward higher income individuals.
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Alan Auerbach |
Berkeley | Bio/Vote History | ||
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David Autor |
MIT | Bio/Vote History | ||
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Abhijit Banerjee |
MIT | Bio/Vote History | ||
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Dirk Bergemann |
Yale | Bio/Vote History | ||
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Marianne Bertrand |
Chicago | Bio/Vote History | ||
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Markus Brunnermeier |
Princeton | Did Not Answer | Bio/Vote History | |
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Judith Chevalier |
Yale | Bio/Vote History | ||
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David Cutler |
Harvard | Bio/Vote History | ||
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Darrell Duffie |
Stanford | Bio/Vote History | ||
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Aaron Edlin |
Berkeley | Bio/Vote History | ||
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Barry Eichengreen |
Berkeley | Bio/Vote History | ||
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Reductions in benefits at any age might come with means testing. And increases in payroll taxes might be accompanied by some general revenues.
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Liran Einav |
Stanford | Bio/Vote History | ||
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Ray Fair |
Yale | Bio/Vote History | ||
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Edward Glaeser |
Harvard | Bio/Vote History | ||
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Pinelopi Goldberg |
Yale | Did Not Answer | Bio/Vote History | |
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Michael Greenstone |
University of Chicago | Bio/Vote History | ||
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unclear what prudent means. clear that life expectancy has increased substantially & this could be the case for gradually increasing the benefits eligible age (at least for some populations). also, open question as to whether SS benefits should be subject to (progressive?) tax
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Oliver Hart |
Harvard | Bio/Vote History | ||
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An increase in payroll taxes for wealthier people makes sense but not for everyone. Also increasing the age at which these benefits start, given that people are living longer, seems reasonable.
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Bengt Holmström |
MIT | Bio/Vote History | ||
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Caroline Hoxby |
Stanford | Bio/Vote History | ||
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This is an overtly normative question (the word "prudent" is an unmistakable sign of normative judgement). Economists are normally supposed to limit themselves to positive questions. I do not recall that anyone made us The Social Planner or God.
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Hilary Hoynes |
Berkeley | Bio/Vote History | ||
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Taxes yes. Not best to reduce benefits across the board. I would preserve benefits for low wage workers and those unable to work to advanced ages.
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Erik Hurst |
Chicago Booth | Bio/Vote History | ||
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A prudent approach would be to think about all margins of adjustment. These are two potential margins. A third margin would be to adjust the retirement age upwards (while keeping benefits at other ages constant).
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Kenneth Judd |
Stanford | Bio/Vote History | ||
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A bipartisan deal did this in the early 80's. Proposals along this line were discussed in the mid-90's by Gingrich and Clinton but were derailed by the Republican obsession with Lewinsky and Clinton. This remains the only sane way to go.
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Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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Reduced benefits, yes. Increased taxation, depends on how it is done. Do not want to reduce incentives to work, like Western Europe has done -- to its great detriment.
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Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
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Especially if the benefit cuts were graduated and tilted towards high earners. This would have been much better to address 20 years ago when the baby boomers had time to adjust to planned reductions. Probably too late to do anything now for that cohort
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Pete Klenow |
Stanford | Bio/Vote History | ||
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We should also consider a gradual increase in the retirement age.
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Jonathan Levin |
Stanford | Bio/Vote History | ||
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Eric Maskin |
Harvard | Did Not Answer | Bio/Vote History | |
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William Nordhaus |
Yale | Bio/Vote History | ||
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Good political compromise
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Maurice Obstfeld |
Berkeley | Bio/Vote History | ||
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Also need to raise retirement ages somewhat.
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Parag Pathak |
MIT | Bio/Vote History | ||
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Larry Samuelson |
Yale | Bio/Vote History | ||
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The sooner we start, the better.
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José Scheinkman |
Columbia University | Did Not Answer | Bio/Vote History | |
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Richard Schmalensee |
MIT | Bio/Vote History | ||
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The max taxable income should also be increased, which is a form of payroll tax increase.
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Fiona Scott Morton |
Yale | Bio/Vote History | ||
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Carl Shapiro |
Berkeley | Bio/Vote History | ||
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Robert Shimer |
University of Chicago | Bio/Vote History | ||
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Stefanie Stantcheva |
Harvard | Bio/Vote History | ||
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James Stock |
Harvard | Bio/Vote History | ||
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Increasing the normal retirement age should also be on the table.
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Nancy Stokey |
University of Chicago | Bio/Vote History | ||
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Chad Syverson |
Chicago Booth | Bio/Vote History | ||
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Richard Thaler |
Chicago Booth | Bio/Vote History | ||
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Christopher Udry |
Northwestern | Bio/Vote History | ||
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Although "the most prudent" might also include other tax increases or spending reductions.
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