How each funding mechanism creates its own problem leading

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Question: Both the federal government's Social Security Trust Fund and state and local governments' public employee pension trust funds face long-term funding deficits. However, the reason for the funding deficit is different for these two types of funds, largely due to the difference in funding mechanism. The funding mechanism for Social Security Trust Fund is pay-as-you-go whereas that for state and local's public employee pension trust funds is advance funding. Please explain how each funding mechanism creates its own problem leading to the long-term funding deficit.

Reference no: EM133337210

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