Changes Americans Are Willing to Make to Fix Social Security

EconEye Admin

4 years ago

The clock is ticking for Congress to repair Social Security. Projections show funds will be depleted in 2035. A survey shows 81% of respondents support reducing benefits for high earners and 75% support raising the retirement age.—cnbc.com

Answer the following questions to check your understanding of the story.

Why is Social Security a ticking clock for Congress?

Social Security is a ticking clock for Congress because ______________.

a) the present value of the government’s tax receipts exceeds the present value of the government’s commitments to pay benefits

b) the future value of the government’s tax receipts exceeds the present value of the government’s commitments to pay benefits

c) the present value of the government’s commitments to pay benefits exceeds the present value of its tax receipts

d) the future value of the government’s commitments to pay benefits is less than the present value of its tax receipts

Wrong! - To determine the full extent of the Social Security obligation, do we compare benefits and tax receipts at the same point in time or at different times?

That's Right! - To determine the full extent of the Social Security obligation, we need to compare benefits and tax receipts at the same point in time. Social Security is a ticking clock for Congress because the present value of the government’s commitments to pay benefits exceeds the present value of its tax receipts.

How can the Social Security problem be reduced?

The Social Security problem can be reduced if Americans are willing to _______________ or do both.

a) pay a lower Social Security tax or receive a lower Social Security benefit

b) pay a lower Social Security tax or receive a higher Social Security benefit

c) pay a higher Social Security tax or receive a higher Social Security benefit

d) pay a higher Social Security tax or receive a lower Social Security benefit

Wrong! - How can changing the Social Security tax change the Social Security problem? How can changing the Social Security benefit change the Social Security problem?

That's Right! - The Social Security problem arises because Social Security tax revenues are insufficient to pay the benefits. If Americans are willing to pay a higher Social Security tax or receive a lower Social Security benefit or a combination of both, then the problem can be reduced.

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