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In recent years there has been a contentious political debate in the United States between those on the right and those on the left about Social Security reform. There is general agreement that as of about 2042 it will be necessary to sharply reduce Social Security pensions benefits, or to sharply increase the payroll taxes used to finance the system, or to enact some combination of the two (Board of Trustees, 2004). These would be the choices in the very unlikely event that no substantial reforms were introduced prior to that date. It is generally agreed that the necessary tax increase and benefit cuts will be less draconian if we start to phase in the changes sooner rather than later (Diamond & Orszag, 2004). There is also general agreement that Social Security reform is going to be based on a combination of several reforms, not one reform such as just introducing individual retirement savings accounts. Yet, while there is consensus that many changes will be called for, there is much disagreement about whether the goal should be to radically restructure Social Security or to make more modest reforms designed to preserve its current structure and to retain its traditional focus on social insurance objectives.

WHAT IS THE CENTRAL GOAL FOR SOCIAL SECURITY REFORM? ADDING INDIVIDUAL ACCOUNTS OR PRESERVING THE SOCIAL INSURANCE MISSION?