| Summary: | The Social Security System is projected to encounter both short-term and long-term financial crises. The economic effectiveness and impacts of alternative solutions to both problems are analyzed. Government projections show the short-term deficit can be solved through interfund borrowing. Solving the long-term deficit will require the generation of new funds. All four solutions analyzed will increase unemployment, inflation, and interest rates, and decrease growth potential. A combination of increased OASI taxation and mandatory coverage is recommended as the most effective solution with the least adverse economic consequences.
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