William Baumol has written a very provocative article on the social rate of discount [1]. There is no doubt that the specification of the discount rate for evaluating governmental projects has perplexed economists for quite some time and will probably continue to do so. Baumol's major contribution to this problem is his formulation which, unfortunately, he did not fully exploit. Using his formulation, I will show that his conclusions are merely special cases of the general case; in addition the following conclusions emerge: (1) the social rate of discount is a weighted average of observable pre-tax market rates of return and is not itself directly observable. The weights depend on how individuals in the private sector react to the transferral of resources. (2) Both risks and time preferences are given their appropriate consideration in this weighting process and neither need to be explicitly considered again. Hence, the indeterminacy or the inconsistency that Baumol found disappears, and the question about what is the appropriate rate of discount becomes an empirical one. Section I contains an analysis of the social rate of discount when there are no risks in the economy and time preferences are ignored. Risks are introduced in Section II and time preferences in Section III.