The New America Foundation’s Education Policy Program released an issue brief detailing the completion of the fiscal year 2013 appropriations process and the start of 2014 budgeting. The brief explores congressional budget actions over the past year and describes their effects on federal education programs.

Until recently, the “three-legged stool” was the reigning metaphor for achieving retirement security. Workers could anticipate being supported as they aged by a combination of Social Security benefits, private pension income, and personal savings. This model no longer holds. Traditional pensions have almost disappeared from the private workforce, personal savings are low, and Social Security benefits face political and actuarial threats. The new model relies on defined contribution (“DC”) plans like the 401(k).

The American welfare state has been more malleable than its European counterparts. While this can be attributed to historical circumstances, adverse effects of social programs, notably public assistance and child welfare, are contributing factors. In recent decades, the private sector has become more influential in shaping American social welfare through demonstrations emerging from the nonprofit sector, the shaping of public philosophy by policy institutes, and the ability of corporate providers to conform policy to their preferences.

Executive Summary The conventional wisdom about Social Security is profoundly misguided. According to today’s mistaken consensus, the U.S. as a society cannot afford to allocate the money to pay for the present level of Social Security benefits for retirees in future generations. The solution, it is widely argued, is to cut benefits – either directly by means-testing or indirectly by raising the retirement age or allowing inflation to erode their real value over time. In this narrative, tax-favored private savings vehicles like 401(k)s and IRAs should be expanded in order to compensate for the allegedly necessary cuts in Social Security.