Policy Documents

Limiting Social Security’s Drag on Economic Growth: Program Reforms to Facilitate Labor and Savings Formation

Charles Blahous and Jason J. Fichtner –
November 1, 2012

Despite the lack of action, most policymakers understand the urgency of the federal entitlement crisis, and specifically, of the need to reform the largest entitlements—Medicare, Social Security and Medicaid—to constrain cost growth.

Less frequently discussed, however, is the importance of reforming these programs in a way that ensures their future operation doesn’t unnecessarily constrain broader economic growth, labor participation and savings.

This Mercatus Center at George Mason University study finds that pro-economic growth entitlement reform must not only rein in unsustainable cost growth. It must also remove the barriers to labor force participation and disincentives to personal savings currently embedded in the largest entitlement programs generally, and the Social Security program in particular.