¹ Social Security refers to the Old-Age, Survivors and Disability Insurance (OASDI) programs that pay cash benefits to retired and disabled workers, their dependents and survivors. Currently, 12.4 percentage points of the 15.3 percent FICA payroll tax goes to fund OASDI. The Social Security benefits tax also supplies a small amount of revenue.

² Social Security Brief History, Social Security Administration, on the Internet at http://www.ssa.gov/history/history6.html.

³ Marshall N. Carter and William G. Shipman, Promises to Keep: Saving Social Security's Dream (Washington, DC: Regnery Publishing, 1996), p. 30.

⁴ 1997 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds, Washington, DC, April 1997 (hereinafter referred to as Board of Trustees Report), Table II.F19.

⁵ Enrollees in Part B are charged a monthly premium calculated to cover 25 percent of the cost, with the remainder of the cost paid from general revenue. Both Medicare Part A and Part B have deductibles and copayments.

⁶ The Trustees project Medicare Part B costs paid by the government as a percent of gross domestic product. This study converts the calculations to a percent of taxable payroll. See 1997 Annual Report of the Federal Supplementary Medical Insurance Trust Fund, Washington, DC, April 1997, Table III.A1.

⁷ Under the intermediate assumptions, health care costs will grow 2.5 percent faster than taxable payroll in 1997, 3 percent faster in 2000, 2.2 percent faster in 2005, 2.1 percent faster in 2010 and 2.9 percent faster in 2015. 1997 Annual Report of the Board of Trustees of the Federal Hospital Insurance Trust Fund, Washington, DC, April 1997, Sec II.F4 and Table II.F3.

⁸ 1997 Annual Report of the Board of Trustees of the Federal Supplementary Medical Insurance Trust Fund, Secs. II.F5 and III.A and Tables II.F11 and III.A1. The Medicare Part B report frankly says that "assuming a continuation of the historical trend would result in an SMI (Medicare Part B) program so large as a percentage of GDP that it would be implausible given other demands on those resources." Ibid., Sec. III.A.

⁹ Health care spending on the elderly by government programs other than Medicare is assumed to continue at 40.4 percent of Medicare spending. See Daniel R. Waldo, Sally T. Sonnefeld, David R. McKusick and Ross H. Arnett III, "Health Expenditures by Age Group, 1977 and 1987," Health Care Financing Review, vol. 10, no. 4, Summer 1989, Table 4.

¹⁰ For an in-depth discussion of the effect, see Lawrence B. Lindsey, The Growth Experiment (New York: Basic Books, 1990).

¹¹ Ben Wattenberg, "Big Business Wannabe? Future Holds No Boom," USA Today, March 11, 1997.

¹² The pessimistic forecast of the Board of Trustees Report projects a population of 307,645,000 in 2075. Table II.H1. Extending the projection to 2095 shows a population of 288,228,000 compared to 268,055,000 in 1997.

¹³ Extending the projection in the pessimistic forecast shows that 100,095,000 people, or 35 percent, will be age 65 and over in 2095.

¹⁴ World Population Prospects, 1996 Revision, United Nations Population Division.

¹⁵ "Why There Is a Perplexing Shortage of Rich Kids," The Economist, February 22, 1997, pp. 89-90.

¹⁶ See Nicholas Eberstadt, "World Population Implosion?" The Public Interest, No. 129, Fall 1997.

¹⁷ Carter and Shipman, Promises to Keep: Saving Social Security's Dream, pp. 29-30.

¹⁸ Board of Trustees Report, Table II.D2.

¹⁹ Ibid.

²⁰ Fredric D. Wolinsky, Ray R. Mosely II and Rodney M. Coe, "A Cohort Analysis of the Use of Health Services by Elderly Americans," in Journal of Health and Social Behavior, vol. 27, no. 3, 1986, p. 209.

²¹ See Bruce Alberts et al., "Cancer," in Molecular Biology of the Cell, 3rd ed. (New York: Garland Publishing, 1994), pp. 1255-91.

²² Figures for 1993, from U.S. National Center for Health Statistics, Vital Statistics of the United States, annual, and unpublished data, in Statistical Abstract of the United States, 1996.

²³ Ibid.

²⁴ See Robert Eisner, "There's No Need to Pick on the Elderly," Los Angeles Times, November 24, 1996.

²⁵ Facts and Figure about Social Security 1997, Social Security Administration.

²⁶ Ibid.

²⁷ U.S. House of Representatives, Committee on Ways and Means, "Background Materials on the Federal Budget and Tax Policy for the Fiscal Year 1991 and Beyond," February 6, 1990, p. 24, cited in Michael Tanner, "Privatizing Social Security: A Big Boost for the Poor," Cato Institute, Cato Project on Social Security Privatization, SSP No. 4, July 26, 1996.

²⁸ For a fuller discussion, see "Social Security and Race," National Center for Policy Analysis, NCPA Policy Report No. 128, June 1987.

²⁹ 1994 figures, National Center for Health Statistics.

³⁰ Deroy Murdock, "How Social Security Is Rigged against Blacks," Washington Times, July 29, 1997.

³¹ T. J. Eller and Wallace Fraser, "Assets Ownership of Households: 1993," U.S. Department of Commerce, Bureau of the Census, Survey of Income and Program Participation, Current Population Reports, Household Economic Studies, P70-47, August 1995.

³² William G. Shipman, "Retiring with Dignity: Social Security vs. Private Markets," Cato Institute, Cato Project on Social Security Privatization, SSP No. 2, August 14, 1995. The low-income retiree was assumed to be earning $12,600 per year at retirement.

³³ Tanner, "Privatizing Social Security: A Big Boost for the Poor."

³⁴ The change will first affect persons born in 1938, for whom the official retirement age will be 65 years and two months. The official retirement age will then increase gradually until it reaches 67 for persons born in 1960.

³⁵ The actual average age of retirement in the United States is 63.7 for men and 63.5 for women, as calculated by the Organization for Economic Cooperation and Development in 1994. Today only 67 percent of men aged 55-64 are in the labor force, compared to 83 percent in 1970. This reflects a combination of voluntary departures and retirements as a result of corporate downsizing. U.S. Bureau of Labor Statistics, Employment and Unemployment Statistics Program.

³⁶ U.S. Bureau of the Census, Statistical Abstract of the United States, 1996, p. 334.

³⁷ For further discussion of taxing untaxed wages, National Center for Policy Analysis, NCPA Policy Report No. 172, August 1992, pp. 29-30.

³⁸ See National Center for Policy Analysis, NCPA Policy Report No. 169, January 1992, p. 8.

³⁹ Board of Trustees Report, Table II.H1, intermediate projection.

⁴⁰ U.S. Department of Commerce, Bureau of the Census, International Database.

⁴¹ See Peter J. Ferrara, John C. Goodman and Merrill Matthews Jr., "Private Alternatives to Social Security in Other Countries," National Center for Policy Analysis, NCPA Policy Report No. 200, October 1995.

⁴² See the testimony of Anthony Stuart Blunn, Secretary of the Commonwealth Department of Social Security in Australia, to the Subcommittee on Social Security of the U.S. House Ways and Means Committee, September 18, 1997.

⁴³ Ferrara, Goodman and Matthews, "Private Alternatives to Social Security in Other Countries."

⁴⁴ See Luis Larrain, Pension Reforms in Latin American Countries, National Center for Policy Analysis, forthcoming study.

⁴⁵ Mukul G. Asher, "Compulsory Savings in Singapore: An Alternative to the Welfare State," National Center for Policy Analysis, NCPA Policy Report No. 198, September 1995.

⁴⁶ Merrill Matthews Jr., "Some Americans Already Have Privatized Social Security," National Center for Policy Analysis, Brief Analysis No. 215, November 4, 1996.

⁴⁷ William E. Even and David A. Macpherson, "The Consequences of Non-FICA Status in State and Local Pension Plans," National Tax Journal, January 1997.

⁴⁸ Report of the 1994 - 1996 Advisory Council on Social Security, Vol. I: Findings and Recommendations, Washington, DC, 1997.

⁴⁹ Martin Feldstein, "The Case for Privatization," Foreign Affairs, July-August 1997.