With a national discussion underway about reform­ing Social Security, it is timely to consider the impact of possible changes on the nation's small businesses and entrepreneurs. Well-crafted reforms could aid this vital sector, but a survey of economic research shows that quick fixes like payroll tax hikes could be extremely damaging-not only to entrepreneurship, but also to the economy's ability to generate the jobs and growth needed to sustain Social Security.

Why Focus on Small Business and Entrepreneurship?

Small business exercises an immense influence on the American economy. More than 99 percent of all U.S. employers are small, and they employ just over half the private sector workforce. Such firms provide about three-quarters of the nation's net new jobs and half of its private-sector economic output. During recoveries from recent recessions, small businesses have been even more crucial, supplying virtually all of the net new jobs. For example, in 2000-2001, the nation's largest compa­nies suffered a net loss of over 150,000 jobs. During the same period, companies with fewer than 20 employees created over 1.1 million net new jobs.[1]

However, job and output statistics alone tell only part of the story. While larger businesses tend to cre­ate process innovations that strengthen economic effi­ciency, smaller businesses and entrepreneurs are responsible for the lion's share of product innovations that create new businesses and industries[2] Techno­logical developments that appear likely to play a cen­tral role in future U.S. economic growth-such as biotechnology, nanotechnology, homeland security technology, and breakthrough innovations in infor­mation technology-have been closely linked to smaller companies.

This is an unusual feature of the American econ­omy,[3] but it is not a new feature. Of the 200 largest American companies in the late 1990s, 197 could be traced back to entrepreneurial founders, accord­ing to one study.[4]

Small firms are also breaking paths in the rapidly globalizing economy. Between 1987 and 2003, the number of U.S. small-business exporters tripled to over 240,000, and these companies were 20 per­cent more productive, experienced 20 percent faster job growth, and paid 15 percent higher wages than the rest of American business.[5]

At the same time, small business traditionally has offered a way into the economic mainstream for younger and less-skilled workers, the economically displaced, immigrants, and people leaving public assistance. In every American community, small firms present the most vivid human face of the eco­nomic system.

Consequently, Americans have great respect for small businesses. A Gallup poll found large major­ities agreeing that small business represents "one of the best ways to get ahead in America" and saying that they strongly admired small-business owners. Indeed, 90 percent said they would be pleased if a son or daughter started a small business.[6] Surpris­ingly large majorities say that small-business own­ers work harder (91 percent) and contribute more to the community (82 percent) than "people like yourself" do.[7] These survey findings are essentially constant across age, ethnicity, gender, socioeco­nomic status, rural/suburban/urban characteristics, political philosophy, and partisan identification, and they are far more positive than comparable sur­vey results from abroad. These public attitudes help to explain the deep reserves of support that small business enjoys in Congress, state legisla­tures, and other governmental institutions.

Economic studies bear out the public percep­tions about the value of smaller companies and the characteristics of the individuals who propel them. For example, economist William Bradford found that "black and white entrepreneurs have more upward and less downward mobility in the wealth distribution [of the U.S.] than black and white workers, respectively."[8] Similarly, economist Vicenzo Quadrini found that entrepreneurs do in fact accu­mulate more assets and savings and generate more wealth than other individuals at their same income levels.[9] An array of studies has confirmed that the actions and decisions of entrepreneurs spearhead most new job creation.[10]

The good news is that there is enormous latent entrepreneurship in the United States. A 1998 sur­vey of 25,000 individuals in 23 nations found that an amazing 71 percent of U.S. respondents said that they would prefer to be self-employed.[11] Even if half of these individuals were not truly serious about self-employment, the total is still many times larger than the 10 percent or so of Americans who are in fact self-employed.

The bad news is that self-employment and other forms of entrepreneurship are highly sensitive to tax rates[12] and other macroeconomic factors, such as the tax treatment of retirement benefits,[13] including Social Security payroll taxes.

The challenge facing the country is that current levels of Social Security benefits are not sustainable using the system's present financing. Previous efforts to shore up Social Security's financing have focused primarily on increasing the number of individuals and types of wages covered by payroll taxes and on increasing payroll tax rates.

The research reviewed here strongly suggests that if such measures are the central thrusts of the next overhaul, Social Security taxes would likely become a far larger threat to entrepreneurship, small busi­ness, and job creation, which would in turn threaten the nation's economic growth as well as Social Secu­rity's own long-term revenue projections.

Marginal Tax Rates and the Entrepreneur's Decision

To understand why this is true, it is crucial to grasp the role of marginal tax rates.

For an entrepreneur contemplating a business venture, a central question is what the marginal tax rate-the so-called tax on the "next dollar of profit"-will be. Entrepreneurship obviously entails risks, and an entrepreneur will not take them without a "risk premium"-in other words, without rewards that are seen as appropriate.[14]

For example, in a hypothetical but relatively typ­ical entrepreneurial situation, a business opportu­nity appears for an individual who is a wage-earner. That opportunity seems likely to yield $100,000 in taxable profit (after expenses and deductions) in the next tax year. To participate in the opportunity, the entrepreneur would need to sell some securities or perhaps take out a second mortgage on a home. The risk for the entrepreneur is that these assets must be pledged toward a business whose future success is ultimately based on educated guesses.

By contrast, the taxes facing the entrepreneur- the "subtractions" from the return that the oppor­tunity can offer-are the most knowable parts of the entrepreneur's calculation. Assuming that the entrepreneur weighing this $100,000 opportunity acts as a sole proprietor, a partner, or part of a "pass-through" entity like an S corporation or an LLC, the tax calculation might look like this:

1. Federal income taxes. The "business opportu­nity" income would likely fall into the 28 per­cent personal income tax bracket, assuming that the entrepreneur's other wage income does not push the entrepreneur into the 35 percent bracket.
2. State income taxes. These might total 6 per­cent. Various minor state and local taxes and licenses might add another 1 percent. Nearly all of that 35 percent in state and federal income tax would be contingent on the business's mak­ing a profit.
3. Payroll taxes. These must be paid whether or not the business makes a profit. For wages up to the $90,000 cap on federal payroll taxes for Social Security and Medicare, the entrepreneur would owe 7.65 percent in payroll taxes on the salary of each wage-earner in the new venture. If the entrepreneur were self-employed in the new venture, the payroll taxes would include an additional 7.65 percent on the entrepre­neur's wages for the "employee share," for a total of 15.3 percent. Above the $90,000 cap, this payroll tax would drop to 2.9 percent (for Medicare).

As a result, an entrepreneur weighing this hypothetical opportunity as a self-employment proposition would have to decide whether the prospects looked good enough to pay 15.3 per­cent in taxes on personal earnings up to $90,000 and, if the business made a profit, another 35 per­cent in income taxes. If the business opportunity cleared enough to pay the entrepreneur (or any employees) more than $90,000 in salary, there would be a "success reward."[15] The payroll taxes drop to 2.9 percent on wages above that amount, making the marginal tax bite that much smaller on those dollars.[16]

For the prospective entrepreneur, this is a fairly dicey marginal tax rate profile. If there is a "tipping point" in the entrepreneur's "go/no go" decision, anecdotal evidence would suggest it is the 50 per­cent tax threshold-the level at which entrepre­neurs begin grumbling that "the government would be getting most of the money." Current mar­ginal tax rate profiles hover very close to that 50 percent mark for many profitable business oppor­tunities that would generate less than $90,000. While the rates drop after that due to the payroll tax cap, they rise again at $319,000 when the "next dollar" of income falls into the 35 percent federal income tax bracket, nudging the marginal tax pro­file again toward 50 percent.[17]

The other factor that the entrepreneur can know with some certainty is the cost of the money that would finance the transaction. For example, to finance this hypothetical investment opportunity, the entrepreneur could perhaps borrow the money at a 7 percent interest rate or withdraw it from a personal investment that is paying 5 percent. In either case, the entrepreneur would expect the returns from the business opportunity to cover the interest payments (or lost investment opportunity) plus a "risk premium" for taking the risk of pursu­ing the business opportunity. Any time taxes go up, all other things being equal, fewer entrepreneurial opportunities will offer these risk premiums.

Extending the hypothetical case a bit further, if the $100,000 opportunity required the entrepre­neur to bring $300,000 to the table, and if that money cost the entrepreneur 6 percent (or $18,000) in forgone interest or investment income for the year, then the opportunity might need to yield at least $40,000 (13.3 percent) in after-tax profit to justify the risk. "After all," the entrepre­neur thinks, "what if the opportunity doesn't work out? I'd be out a piece of the $300,000-maybe a big piece-plus whatever interest income I might otherwise have generated from it. How much of a premium do I need from this opportunity to justify that risk?"

Thus, if about $50,000 of the $100,000 antici­pated gain is headed directly to taxes,[18] the margin of error on the business opportunity-whether the error is caused by changes in costs, demand, inter­est rates, or simply poor management-is small. Eliminating the $90,000 "cap" on earnings subject to Social Security taxation, or raising the overall payroll tax rate, would narrow or eliminate that margin of error.[19] The risks would look increas­ingly large while the rewards would appear increas­ingly small.

Calculations like these are not often part of the public debate about economic policy, but they ought to be. They represent key elements that entrepreneurs will weigh before producing the jobs and economic growth that the nation needs.[20]

Social Security's Impact
on Marginal Rates

Looking ahead, entrepreneurs may well find themselves nostalgically remembering marginal tax rate calculations like those in the example.

Payroll Tax Increases. Payroll tax increases to support Social Security are very much on the table. According to the Social Security Administration, if Social Security benefits remain on their present course, achieving long-term solvency in Social Security financing through payroll taxes would require a 15 percent increaseif enacted now, a 21 percent increase if enacted in 2018, and a 42 per­cent increase if enacted in 2042.[21]

The reasons for this are increasingly well-known. While 16 workers supported each Social Security beneficiary in 1950, lower birth rates and lengthening life expectancies have since shrunk the ratio to about three workers per beneficiary. If present trends continue, the ratio will drop to two workers per beneficiary within a generation.

Social Security's problems are drawing closer. Once they begin, they will grow quickly and exert enormous stress on the economy and on taxpayers. The system's cash flow will be inadequate to meet promised benefits by 2017 and will grow steadily worse thereafter. Just covering Social Security's cash flow problem over the next 75 years would require an additional $4 trillion, according to the system's trustees-$300 billion higher than the previous year's estimate.[22]

Yet even that unimaginable sum would not elimi­nate all of Social Security's financial needs. The Fed­eral Reserve Board estimates that setting the system fully right would cost more than $10 trillion.[23]

Trying to address these problems through higher payroll taxes would keep the system hostage to the same demographic trends that are undermining it now: There would still be fewer and fewer workers struggling to finance benefits for more and more recipients. Workers would get smaller and smaller returns on their tax "investments" after they retired. If life expectancies increase, birthrates fall further, or immigration of younger people drops below projections, further upward revisions in payroll taxes will be needed.

Additional Tax Increases. There is another problem with depending on payroll taxes: Doing so runs a high risk of requiring higher taxes outside of Social Security.

Social Security has a funding surplus now. The system takes in more taxes than it needs to pay ben­efits, but that extra money is not being saved. It is being used to fund other functions of government. As the Social Security surplus starts shrinking after 2008, financial pressure on the overall federal bud­get will increase. All of the programs that were being financed with Social Security money will begin losing their access to it. The payroll tax increases now being discussed would cover the costs of paying Social Security benefits, but the Social Security surplus that the rest of the government has been using would still shrink and finally disappear. What will make up for that funding shortfall?

Furthermore, Social Security is not the only fac­tor exerting upward pressure on the federal budget. The budget will also be squeezed notably by health care costs. Federal health care outlays for both Medicare and Medicaid are rising. Today, that spending is roughly equal to Social Security, at about 4 percent of the nation's gross domestic prod­uct (GDP). By 2050, while Social Security spending rises to 6.5 percent of GDP, Medicare and Medicaid spending will rise to 12 percent of GDP.[24] This sys­tem is unsustainable with its present financing.

Unless the rest of the federal budget can be cut back substantially (which is unlikely, based on his­torical experience), payroll tax increases for Social Security could well be followed or accompanied by significant increases in other federal taxes.

Putting Social Security on a sound financial foot­ing will provide more flexibility for addressing the enormous challenges ahead on health care financ­ing and the overall federal budget. But ignoring the Social Security financial crisis or taking half-mea­sures that allow it to deepen almost guarantees that these future fiscal problems will make one another worse-and lead to significant tax increases.

This leads to the key long-term issue: Even the most ambitious proposals for reforming Social Security, not to mention Medicare, still depend heavily on taxes that future workers will pay.

What if there are not enough future workers? What if all the calculations about the number of future workers are too high? This could happen if the key job-creating mechanism in the economy slows down or stops. That mechanism, of course, consists principally of entrepreneurial activities.

If the tempo of job creation by entrepreneurs slows to the point that new jobs stop appearing in large enough numbers, all of the payroll and income taxes supporting all of these programs and functions could be forced into a destructive spiral in which ever-lower revenues lead to ever-higher rates-a spiral that could start feeding on itself.

Yet that is precisely the economic risk the nation would be taking by increasing the marginal tax rate profiles of entrepreneurial activity.

Pre-Funding Social Security

There is, however, one very good reform option that can help to prevent this from happening.

A big difference between Social Security and much of the rest of federal spending is that Social Security retirement benefits can be pre-funded, like a typical private-sector (or government) retirement plan.[25] Doing so, particularly as part of a package of reforms, would greatly lessen Social Security's long-term squeeze on federal revenues. It would also help to create incentives for entrepreneurship by improving the retirement income prospects for entrepreneurs and those who work for them.

Pre-funding Social Security could be accom­plished by diverting a portion of payroll taxes into personal retirement accounts that would be invested in broad portfolios of stocks and bonds, comparable to those used by other pension plans. Such an approach to pre-funding government retirement income programs has been imple­mented in recent years in Australia, Sweden, the United Kingdom, and a number of countries in Latin America and Central and Eastern Europe. In many of these nations, significant support for pre-funding has come from both business and labor. Indeed, the federal government itself offers a Thrift Savings Plan to its own employees that is based on similar principles.

However, there continues to be a hesitancy about pre-funding Social Security through personal accounts. The trouble with waiting to enact this reform is that, with each passing year, the "miracle of compound interest" has one less year to operate. Just as it is relatively inexpensive to fund a retire­ment starting at age 20 and very expensive to fund one at age 50, so the costs of waiting to pre-fund Social Security will grow. Each year of delay gives the investments in a personal account less time to work, resulting in smaller balances. This in turn puts greater pressure on payroll taxes to make up the difference.

Congress has a window of opportunity to put Social Security on a sounder fiscal footing by shifting toward pre-funding, perhaps setting a precedent that can help financially to sustain other entitlement pro­grams. Or Congress can let the window close. It can continue to address the cash flow problems in Social Security and other entitlement programs through higher payroll taxes, and it can continue to ignore the effects on the larger federal budget picture and procrastinate further on the unfunded liabilities.

Taking the latter path not only would mean higher Social Security payroll taxes, but also would likely mean more pressure to increase marginal tax rates to support other government functions. It could also mean a shortfall in the jobs on which everyone is depending to keep the whole system afloat.

The Outlook for Entrepreneurial Growth

A search of the economic literature does not reveal any studies examining the impact on entre­preneurship of a series of marginal rate increases of the magnitude that such a policy of drift would eventually entail, perhaps because it would be so unthinkable to most economists. However, there is some important evidence.

• A recent study of tax differences among advanced industrial countries found that dur­ing the 1990s, a tax increase of 12.8 percent led to 122 fewer hours worked per adult per year, a 4.9 percent drop in the ratio of employment to population, and a rise in off-the-books business activities in the "shadow economy" equivalent to 3.8 percent of GDP. Worse, it led to a 10 per­cent-30 percent loss of employment in the retail, wholesale, automotive repair, food ser­vice, and hotel industries-jobs most likely to be held by poorer workers, including minori­ties and immigrants.[26]
• A long-term study of Sweden showed entrepre­neurial activity essentially shutting down once overall marginal rates rose well above 50 per­cent and estate taxes increased.[27]
• A panel study of 30 prosperous countries showed a very strong relationship between ris­ing government shares of gross domestic prod­uct, in large part reflecting tax rates, and falling levels of self-employment.[28]
• In the U.S., another study has shown a signifi­cant drop in hiring by entrepreneurial busi­nesses and the salaries paid to employees at such businesses as marginal rates rise.[29]

All of this meshes with anecdotal evidence from entrepreneurs. As marginal rates rise noticeably above 50 percent, the complaints of entrepre­neurs seem to shift from strong skepticism ("It looks like the government would be making more on this than I would.") to outright rejection ("Why should I do it? I'd just be working for the government.").

A Social Security reform plan that is blind to these impacts could be a disaster for the nation's economic growth and the efficient use of its resources.

Entrepreneurs and Retirement

While entrepreneurs are important allocators of capital and other resources, they are also individu­als with their own retirement needs. Retirement income sources in the U.S. are sometimes described as legs of a "three-legged stool," with Social Security benefits as one leg and pensions and personal savings as the other two. Entrepreneurs and those who work for them do not fare especially well with respect to any of these legs, and the pros­pects are not promising.

Pensions. Most people in small businesses do not have pensions. While 64 percent of full-time employees at mid-size to large-size businesses with more than 100 employees are offered employer-supported retirement benefits, only 34 percent of full-time workers in small private establishments are covered by a retirement plan.[30] Among busi­nesses with one to nine employees, the figure drops to 22 percent.[31]

Nor does it appear to be getting much better. Of those small businesses without pension plans, about half have never heard of Simplified Employer Pensions (SEP), which were intended by Congress to address this need, and only 3 percent of these companies say they are "very familiar" with SEPs. One-third have never heard of Savings Incentive Match Plan for Employees of Small Employers (SIMPLE), supposedly the other small-business pension fix, and only 11 percent express strong familiarity with it. Only 7 percent of small busi­nesses without pension plans say that they are very likely to add them, and 43 percent say that they are very unlikely to do so.[32]

The reasons stated for this are important. Nearly three-quarters of the non-sponsoring businesses say they would be more willing to offer pensions if their companies were more profitable. Studies based on financial data from smaller companies back up this assertion, consistently showing a strong relationship between the companies' profit­ability and the employee benefits, like pension plans and health insurance, that they offer.[33] Taxes are obviously a major factor in determining profit­ability for many companies.

The next two most frequently cited reasons are also quite relevant to retirement income reform proposals: Two-thirds of the companies without pen­sion plans say they would be more likely to offer them if the plans did not require employer contributions, and 56 percent say they would be more likely to do so if there were business tax credits for such plans.[34]

Savings. Most Americans, including most entre­preneurs, do not save enough money for retire­ment. Federal incentives like "regular" IRAs, Roth IRAs, expanded deductibility for dividend pay­ments, and a multimillion-dollar Choose to Save education campaign mounted by a huge public- private partnership are not working. Only 18 per­cent of the American people have more than $100,000 in private savings dedicated to their retirement, and only 38 percent have more than $25,000.[35] While some of those with higher sav­ings may be younger workers who will continue adding to their savings, these amounts still repre­sent very little money for periods of retirement that are likely to span 10-15 years.

Figures on personal savings for retirement are not generally available by business size, but a study by the National Association for the Self-Employed found that 78 percent of the entrepreneurs that it represents had saved less than $100,000 for retire­ment, although virtually none of them had private-sector pensions and their median age was 46.[36] When questioned closely in a major national poll on saving, a majority of those not saving enough (in other words, a majority of a majority) said that they do not save because they simply do not have sur­plus cash to allocate to savings. This is particularly true of people at middle-income to lower-income levels.[37]

Social Security Benefits. Since entrepreneurs and those whom they hire are less likely than employees of larger companies to have pensions and no more likely to have adequate retirement savings, they would be more seriously and dispro­portionately affected by cuts in Social Security ben­efits. Equally disturbing, such benefit cuts would make retirement planning an even more daunting challenge for entrepreneurs and small business. In the words of David Birch, a pioneer in modern studies of job creation:

The average graduate from high school or college will have 13 different jobs during their working life. They will average 3½ years on each job. Clearly they are going to have to build a retirement plan themselves, since it takes at least three years to get vested under retirement law.… The majority of people in college or high school are very much into free agency.… They view themselves as providing for their own retirement.… They do whatever it takes, but they are going to have to build their retirement fund.[38]

If retirement income prospects were to discourage many in this cohort from taking up entrepreneur­ship in favor of "safer" choices like long-term employment in large enterprises (even if that were a realistic option), the consequences for the nation's economic efficiency, openness, growth, and innova­tion would be damaging. Again, any major slow­downs in the nation's engine of job creation, which is largely powered by entrepreneurs, would have enor­mously negative consequences for Social Security.

Principles for Reform

Taken together, these findings suggest five important principles for retirement policy and Social Security reform:

1. Efforts to expand pension coverage are unlikely to succeed unless the coverage is significantly tax-advantaged and easily administered, employer contributions are minimized, and the overall economic climate is positive.
2. Simply providing new opportunities to save will not solve the retirement income dilemma. Indi­viduals already have many attractive ways to save for retirement, but these opportunities are underutilized by many middle-income and lower-income citizens, who say that they do not have enough money left to save for retirement after they pay for their basic needs.
3. Social Security benefits are likely to be a more important source of retirement income for entrepreneurs and those who work in smaller companies than for other Americans.
4. Some way must be found to sustain and, if pos­sible, increase retirement benefits-one that does not increase payroll taxes and that does not assume that voluntary contributions will be made to a savings plan simply because that plan exists.
5. Raising taxes on entrepreneurs is not the way out of the dilemma. If Congress tries to "solve" Social Security's financial problems by raising marginal tax rates, there will be fewer entrepre­neurs. If there are fewer entrepreneurs, there will be fewer new jobs created and slower eco­nomic growth. With fewer jobs and slower growth, Social Security's problems will become far worse.

The Best Reform Option for Entrepreneurs

Of all the Social Security reform proposals cur­rently being discussed, the one that best fits all of these criteria is diverting a portion of existing pay­roll taxes into personal accounts that workers would own and control themselves. There are sev­eral key reasons for this.

• Personal accounts that are developed from existing payroll taxes would likely increase Social Security benefits while avoiding major payroll tax increases. This meets two of the entrepreneur's needs simultaneously. It could decisively improve the rate of return that entre­preneurs would achieve for their own retire­ments, and it could help to avoid marginal tax increases that would create an unfavorable eco­nomic climate for entrepreneurial activities. Both factors would create strong incentives for entrepreneurship.
• The personal account option would not require the entrepreneur, as an employer, to increase the contribution level for employee pensions or savings funds. Yet personal accounts would likely offer those employees a better rate of return than they could expect from the existing Social Security system. This would make work­ing for an entrepreneurial business-even one without a pension plan (or one with a plan that requires several years to vest)-a more attrac­tive option for potential employees.
• The personal account option directly addresses the two key structural flaws in the current sys­tem: the demographic squeeze of fewer work­ers supporting more retirees for longer periods of time and the huge unfunded liability. Payroll tax increases would not fundamentally address either structural problem. Under a personal account system, benefits would rise as the value of investments rose. The benefits would not depend on the forbearance of workers under ever-heavier tax burdens or on some unlikely spurt of population growth. What are often called the "transition costs" to a personal account system are seen more accurately as an explicit recognition of existing liabilities in a system that is paying down those liabilities and pre-funding its future pension benefits like most pension plans. Moving toward pre-fund­ing and paying down unfunded liabilities are important steps in reducing the downstream pressure for higher taxes.
• Since personal accounts would create assets that could be passed on to heirs, the number of individuals receiving inheritances (or larger inheritances) would rise. This would aid the retirement income prospects of the next gener­ation. Research has also shown that individuals receiving inheritances are far more likely to engage in entrepreneurial activities than is the population as a whole.[39] Thus, personal accounts, in and of themselves, would indi­rectly increase entrepreneurship.
• Because entrepreneurs focus on economic risks, they are likely to make informed choices about whether or not to choose personal accounts and to convey their thinking to their employees. This kind of constructive scrutiny will be good for the system. However, entrepreneurs will also under­stand, and be accepting of the fact, that some people may choose the "known" of the tradi­tional Social Security system over the relative "unknowns" of personal accounts.
• A personal account system would help to curtail the current practice of having the Treasury Department cover its borrowing from the Social Security system by issuing non-publicly traded government securities (IOUs) to that system. In contrast to this practice, personal account funds would be invested in private and public equities markets, where money is substantially more transparent and fungible. Over time, therefore, personal accounts would likely increase the cap­ital available for entrepreneurial ventures.

In sum, personal accounts offer two fundamen­tal advantages for small business: actions that the government would not have to take (unnecessarily raising taxes or cutting Social Security benefits) and results that the private sector would generate (enhanced entrepreneurship, strengthened capital markets, and improved retirement incomes). In the end, empowering entrepreneurs in this way would benefit the entire nation as additional jobs were created and economic growth was sustained.

As for the Social Security system itself, perhaps no one has offered a better appraisal than its founder, President Franklin D. Roosevelt:

Social Security is a development towards [a] goal, rather than a finished product. We should be constantly seeking to perfect and strengthen it in the light of our accumulating experience and growing appreciation of social needs.[40]

James Morrison, Ph.D., has specialized in small-business and entrepreneurship policy for over 20 years. He is a trade association executive in Washington, D.C.