Exercise 2. Complete the text with missing words

In the past few years, the severe financial problems of the social ___________ system have received

widespread public _________. The changing _________ structure of the U.S. population will make it

increasingly expensive to _________ any level of ____________. If nothing is done to slow the growth of

benefits specified in existing ____________, the social security tax __________ must rise to more than 20%

in the next 25 years.

Most people in the business _________ and in government still regard social security as an expensive, but

benign, ____________ program that worsens our tax ____________ but does not materially affect the

economy.

The most important economic effect is a _________ in the nation's _________ of saving. Social security is

the real root of our capital __________ problem. Although tax __________ for greater saving and investment

can ____________ the rate of capital formation, that rate will continue at a very low level until we can reduce

our _____________ on social _____________.

The promise of old age ___________ influences middle- and low-income workers to trim their saving. Often

this reduction is achieved through explicit integration of ____________ pensions and social security; pension

benefits (and therefore previous contributions) fall in _____________ to social security benefits. The

reduction is also achieved directly as employees cut _______ their retirement saving in _________ of

government benefits.

Since the social security program is financed on a pay-as-you-______ basis, the government does not

________ the tax dollars it receives but pays them out immediately as ________. The government keeps

only a "_________ cash"* fund equal to a few months' worth of payments. There are no other __________.

So when the social security system induces individuals to reduce their __________, the program has no

_________ to offset the level of private saving. And without a stockpile there can be no investment or capital

____________.

For most American families social security is the most important asset. The ___________ value of the

benefits to which the breadwinners will be ____________ at age 65 exceeds the value of all other combined

assets of their families. Although no __________ assets corresponding to these actuarial values exist, it is

perfectly rational for individuals to regard this "wealth" as a ____________ for other forms of accumulated

assets.

Under existing legislation old age benefits are required to grow indefinitely in proportion to __________.

Therefore, social security will continue to __________ real capital formation to at least the extent that it does

today. If anything, the growth of real income and the development of formal pension integration methods will

mean an even greater future ____________ on private saving.

A low rate of capital formation and its adverse ______________ are, however, avoidable by reducing the

growth rate of old age benefits in order to ___________ greater reliance on individual saving and private

pensions.

One method of doing this would be to ____________ the age of eligibility for full pension benefits to age 70

while _____________ the option of retirement at any time after age 62, with payment on an actuarially

reduced basis. By making the change _____________ some years from now, the government would reduce

the growth of benefits without _____________ benefits of the retired or those near ___________. Moreover,

younger workers would pay a lower total tax during the remaining ____________ years.