When the Social Security System Enters Its Deficit Years and the Bonds

question 184

Multiple Choice

When the Social Security system enters its deficit years and the bonds held in the trust fund are drawn down,

• A) overall taxes will be reduced as the trust funds are used to pay benefits to retirees.
• B) the payroll taxes used to finance Social Security benefits can be reduced because the trust funds will be sufficient to pay the retirement benefits of the baby boom generation.
• C) taxes will have to be raised (or additional funds will have to be borrowed) in order to redeem the bonds held in the trust fund.
• D) income taxes will have to be reduced in order to keep the revenues and expenditures of the Social Security system in balance.