Reforming the Social Security retirement program is an issue of enormous practical importance. Yet it remains the missing piece in American policy analysis. At a time when the Congress and the Administration are considering ways to reform. welfare, Medicare, Medicaid, and the income tax, elected officials are still unwilling to confront the serious problems of our Social Security system. Eventually, however, its deteriorating financial condition will force major reforms. Whether those reforms are good or bad, whether they deal with the basic economic problems of the system or merely protect the solvency of existing institutional arrangements will depend in part on whether we, as economists, provide the appropriate intellectual framework for analyzing reform. alternatives. Major policy changes that affect the public at large can only happen in our democracy when there is widespread public support for the new direction of policy. In the field of economics, the views of the media, of other private-sector opinion leaders, and of politicians and their advisers, depend very much on their perception of what economists believe feasible and correct. Fundamental policy reforms in a complex area like social security also require the development of technical expertise, both in and out of government, about the options for change and their likely consequences. Fortunately, an expanding group of economists is now thinking and writing about social security reform. My remarks today greatly benefit from what they have written and from my conversations with many of them. I began to do my research on the effects of Social Security reform. nearly 25 year ago [Feldstein, 1974, 1975]. A central concept in my analysis of Social Security has been the notion of 'Social Security wealth,' which I defined as the present actuarial value of the Social Security benefits to which the current adult population will be entitled at age 65 [or are already entitled to if they are older than 65] minus the present actuarial value of the Social Security taxes that they will pay before reaching that age. Social Security wealth has now grown to about ＄11 trillion or more than 1.5 times GDP. Since this is equivalent to more than ＄50000 for every adult in the country, the value of Social Security wealth substantially exceeds all other assets for the vast majority of American households. In the aggregate, Social Security wealth exceeds three-fourths of all private financial wealth, as conventionally measured. Social Security wealth is of course not real wealth but only a claim on current and future taxpayers. Instead of labeling this key magnitude 'Social Security wealth,' I could have called it the nation's 'Social Security liability.' Like ordinary government debt, Social Security wealth has the power to crowd out private capital accumulation and Social Security wealth will continue to grow as long as our current system remains unchanged, displacing an ever larger stock of capital. The ＄11 trillion Social Security liability is three times as large as the official national debt. Although I certainly welcome the current political efforts to shrink future budget deficits, it is worth noting that, even if the traditional deficit is eliminated in the year 2002, so that the national debt is then no longer increasing, the national debt in the form. of the Social Security liability is likely to increase that year by about ＄ 300 billion. Looking further into the future, the aggregate Social Security liability will grow as the population expands, as it become relatively older, and as income rises. Government actuaries predict that, under existing law, the tax rate required to pay each year's Social Security benefit will rise over the next 50 years from the present level of slightly less than 12 percent to more than 18 percent, and perhaps to as much as 23 percent. The det