Social Security Trust Funds as Fiscal and Economics Tools: An Historical and Political Comparison of the United States and Canada

This paper explores the fiscal and economic roles of social insurance trust fund in the United States and Canada, since the 1930s. More specifically, it explores the politics of trust fund management as it relates to the historical development and reform of earnings-related public pensions program (Social Security in the United States and the Canada/Québec Pension Plans in Canada). Grounded in both historical institutional and ideational perspectives, the paper shows how social insurance trust funds related directly to major fiscal and economic issues, and how these issues have shaped the politics of old-age insurance in each country, over time. As argued, as far as old-age insurance is concerned, the accumulation of large old-age trust funds in the name of broad fiscal and economic imperatives has become a major institution in Canada since the mid-1960s while this approach has been much more controversial in the United States. This is especially the case of trust find investment in the economy, which has been embraced in Canada but strongly rejected in the United States. Combining institutional and ideational explanations, this paper explains this major difference between these two liberal welfare regimes.