In the summer of 1990, the federal government's budget deficit once again appears to be an uncontrollable beast, and, as usual, (1) the two major political parties attempt to blame one another for the problem, and (2) the Bush Administration and the Congress each attempts to cast the other in the role of villain. In the midst of the fight over the budget, a contro versy has arisen over the retirement trust funds administered by the Social Security Adminstration. Somewhat inexplicably, the federal budget deficit and the retirement trust funds are, unfortunately, interrelated. It is this interrelationship which is examined in this research.
THE ACTUARIAL STATUS OF THE RETIREMENT
During the first term of the Reagan Administration, the federal goverment tumbled to the fact that the baby boom gen eration would one day become eligible for social security retirement benefits. When a closer look was taken, it was dis covered that the retirement funds would not likely be able to remain solvent when the baby boomers retired, unless changes were made to the system. As a consequence, a new contribution structure was developed, which the Administration and the
2 Congress assured the American public would provide for the fis cal integrity of the retirement trust funds to a point at least mid way through the next century.
The new contribution structure suited the Reagan Adminis tration to a tee, because it enabled the federal government to increase revenue collections while, at the same time, conning the American public into believing that countenanced only reduced federal revenue collections through tax cuts. No mat ter that the increased contributions were supposed to be for retirement trust funds, the Administration recommended, and the Congress passed a law requiring trust fund surpluses to be invested in federal government securities (Grace, 1989). Therefore, both the Reagan Administration and the Congress were in a positi...