Greenspan Commission

Appendix K- Introduction


This background book was originally prepared for the meeting of the National Commission on Social Security Reform on November 11-13, 1982. The present version has been revised to reflect certain additional information that became available after the meeting and to correct a few minor errors.

It presents actuarial cost estimates for various possible changes in the Old-Age, Survivors, and Disability Insurance program. The changes presented are intended to represent an objective selection which covers all of the major options open for resolving the short-range and long-range financing problems of the OASDI program. Quite naturally, there are many permutations and combinations of the several options -- varying by effective dates, benefit percentages, normal retirement ages, etc. However, it is believed that the changes presented are reasonably representative. The effect of different proposals than these can usually be seen from the data presented here.

Also presented are a number of tables which show the past experience of the OASDI and Hospital Insurance programs and their estimated future experience. Attention is particularly directed to Tables 5 and 10, which address the short-range problem, and to Tables 6, 7, and 8, which address the long-range problem.

The various cost estimates presented were prepared in most cases by the Office of the Actuary, Social Security Administration.

The long-range cost effects of the various possible changes considered are expressed as percentages of taxable payroll -- which makes them comparable with payroll tax rates. For example, a long-term cost of +.38% of taxable payroll means that, if this were to be financed by a level tax rate in all future years, then a combined employer-employee rate of .38% would be required. This is done rather than expressing them in terms of dollars, because of the difficulty of expressing costs over long future periods of years in such terms when assumptions of continuously rising wages and prices are involved. The taxable payroll in 1982 is about $1.4 trillion (so that 1% of payroll would be $14 billion).


(1) Increased cost is indicated by a plus (+) sign.
(2) Cost reduction is indicated by a minus (-) sign.
(3) All estimates are on the basis of calendar years.
(4) All estimates are for the OASDI Trust Funds only, unless otherwise indicated.
(5) A "O" means that the cost effect for the year is zero, while a ".0" means that it is less than $50 million.
(6) References to "long-term" mean the years 1982-2056.
(7) Long-term estimates are on the basis of the Alternative II-B assumptions of the 1982 OASDI Trustees Report.
(8) When all of the short-term cost figures are zero, no short-term cost table is presented.