The 1983 Amendments to the Social Security Act: The Issue of Intergenerational Equity

WITH THE enactment of P.L. Martha N. Ozawa than was needed to pay benefits. Be 98-21, the Social Security Act tween 1975 and 1981, OASI expert amendments of 1983, this country enced a net decrease in its trust fund demonstrated that it is willing to face of $790 million to $4.9 billion a year. head on the challenge of meeting Because of the continuing imbalance social security's enormous financial Have the 1983 amendments between income and disbursement, crisis. Through a complex, sweeping, fh cnninl „IPT,,o thp conditions have grown even further without the on April 21, 1983: article reviews me conciliions 1983 was considered to that prevailed before the pasbe short range and related to the Our elderly need no longer fear sage of the amendments, the general economy. Until two years that the checks they depend on probable effects of the amendago, the American economy suffered will be stopped or reduced. These ments, and the future direcfr°m high inflation and was crippled amendments protect them. Amer«nn nf cnrin 1 ^prurito by high unemployment. Struggling icans of middle age need no longJ against such economic adversity, the er worry whether their career-long social security system had to take investment will pay off. These care of benefit obligations that grew amendments guarantee it. And commensurate with the rising cost of younger people can feel confident living and manage revenue that was that Social Security will be around conditions of the old age and surnot increasing enough to meet the when they need it to cushion their vivors insurance (OASI) trust fund obligations. It was estimated that retirement.1 before the 1983 amendments were deficits would reach between $150 enacted and reviews the relationship and $200 billion during the years Although the 1983 amendments between past contributions and fu1983-89. apparently have solved the short-term ture benefits for different cohorts of In addition to the short-term prob and long-term financial problems, average-wage earners. (These future lem, social security faced a long questions such as these remain: Can benefits were projected before Conrange financial problem, caused pri the public maintain its sense of relief gress enacted the 1983 amendments.) marily by the shifting composition of and stability about social security for Second, it reviews the Congressional workers and beneficiaries. When the the next seventy-five years? Will the actions taken in the 1983 amendbaby-boom generation retires in the nation be free of political controversy ments. Third, it discusses future imnext century, two workers will be over social security for the next sevplications of the Congressional actions supporting one beneficiary; the cur enty-five years? Will different cohorts that may shed light on the questions rent ratio is three to one. For OASI of beneficiaries feel they are being that were just raised. to meet its growing financial obliga treated fairly regarding the amount tions to pay benefits, it was estimated of benefits they will receive during before THE 1983 that from 1982 until 2056, additional this period? Will future generations AMFIvnvrFNT«; revenue equivalent to 2.48 percent of of social security taxpayers feel they A 10 the taxable payroll would be required are being treated fairly about the Financial difficulties in social security above the revenue anticipated under taxes they will have to pay? were first noticed in the mid-1970s the earlier law. Even when the OASI This article is divided into three when the OASI trust fund collected and the disability insurance (DI) trust parts. First, it discusses the financial revenue that was consistently smaller funds were considered together, a