TY - JOUR AU - Auerbach,Alan J. AU - Gokhale,Jagadeesh AU - Kotlikoff,Laurence J. TI - Social Security and Medicare Policy From the Perspective of Generational Accounting JF - National Bureau of Economic Research Working Paper Series VL - No. 3915 PY - 1991 Y2 - November 1991 UR - http://www.nber.org/papers/w3915 L1 - http://www.nber.org/papers/w3915.pdf N1 - Author contact info: Alan J. Auerbach Department of Economics 508-1 Evans Hall, #3880 University of California, Berkeley Berkeley, CA 94720-3880 Tel: 510/643-0711 Fax: 510/643-0413 E-Mail: auerbach@econ.berkeley.edu Jagadeesh Gokhale Senior Fellow CATO Institute 1000 Mass. Ave., NW Washington, DC 20001 E-Mail: jgokhale@cato.org Laurence J. Kotlikoff Department of Economics Boston University 270 Bay State Road Boston, MA 02215 Tel: 617/353-4002 Fax: 617/353-4001 E-Mail: kotlikoff@gmail.com M1 - published as Alan J. Auerbach, Jagadeesh Gokhale, Laurence J. Kotlikoff. "Social Security and Medicare Policy from the Perspective of Generational Accounting," in James M. Poterba, editor, "Tax Policy and the Economy, Volume 6" The MIT Press (1992) AB - Our previous study (Auerbach, Gokhale and Kotlikoff 1991) introduced the concept of generational accounting, a method of determining how the burden of fiscal policy falls on different generations. it found that fiscal policy in the U.S. is out of balance, in terms of projected generational burdens. This means that either current generations will bear a larger share (than we project under current law) of the burden of the government's spending or that future generations will have to pay, on average, at least 21 percent more, on a growth-adjusted basis, than will those generations who have just been born. These conclusions were based on relatively optimistic assumptions about the path of social security sod Medicare policies, namely that the accumulation of a social security trust fund would continue and that Medicare costs would not rise as a share of QP. In this paper, we simulate the effects of realistic alternative paths for social security and Medicare. Our results suggest that such alternative policies could greatly increase the imbalance in generational policy, making not only future generations pay significantly more, but current young Americans as well. For example, continued expansion of Medicare in this decade alone could double the 21 percent imbalance figure if the bill for this Medicare growth is shifted primarily to future generations. ER -