April 26, 2014

What World Can Teach the U.S. About Entitlements

Richard Jackson, Global Public Square

The Associated Press

Several countries – including Germany, Italy, Japan, and Sweden – have gone further and introduced “automatic stabilizers” into their public pension systems that, directly or indirectly, index benefits to the growth in the payroll tax base. These stabilizers may differ in design, but they have two crucial characteristics in common. First, they are all expressly designed to offset the full impact of demographically driven cost growth. And second, they are all self-adjusting. In effect, they put entitlements on a new kind of autopilot – one that is preprogrammed for cost constraint rather than for cost growth.

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TAGGED: United States, Europe

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