The Social Security DilemmaEssay Preview: The Social Security DilemmaReport this essayTo get our minds off the subprime mortgage meltdown, the housing market slump, the credit crunch, the impending recession, and looming inflationary concerns, let’s turn our attention to another economic problem that has nothing to do with the aforementioned crises. Last week, Treasury Secretary Henry Paulson reminded us that the Social Security system is in dire financial straits. Within the next 10 years, Social Security will begin taking in less than it pays out; and in 2041, the system will be unable to pay the promised benefits.
Here’s the story: Social Security was enacted in 1935 in the midst of the Great Depression. The concern was that America’s elderly population was particularly vulnerable to the economic crisis, which saw the stock market lose nearly half its value and unemployment rates rise to over 25 percent. There were calls and movements throughout the nation for a government-enacted pension plan.
Every year from its inception up until modern day, Social Security has taken in more than it has paid out. This is because there have been more workers paying into the system than there have been retirees drawing from the system.
When Social Security was first enacted, there were more than 40 workers for each retiree collecting benefits. In recent years, this has narrowed to 3.4 workers per eligible retiree, according to a 2001 report issued by the Presidents Commission to Strengthen Social Security. According to the White House website (www.whitehouse.gov), “By the time today’s youngest workers turn 65, there will only be 2 workers supporting each beneficiary.”
There are several factors that have led to the shift in the ratio of workers to retirees. One factor was the baby boom, which lasted from 1945 to 1964. The baby boom added lots of young workers to the nation’s workforce, but the early boomers are now beginning to retire. So the same generation that led to a surge in workers will now lead to a surge in retirees.
Advancements in healthcare have led to longer life spans, which also increases the number of retirees. Lower birth rates in more recent generations also deliver fewer workers to the labor market.
The fact that Social Security has taken in more money than it has paid out since its inception has sustained the system for more than seven decades. But that surplus of funds was also an attractive source of revenue for national policymakers; so much so that, over the years, the national government borrowed the surplus money and issued government bonds in its place. The effect was to transfer the surplus Social Security funds into government debt, which must be paid from future tax revenues. These government bonds make up what is commonly referred to as the Social Security Trust Fund. Contrary to a common misperception, the Social Security Trust Fund doesn’t hold money; instead, it holds these bonds, which are sometimes referred to as government IOUs.
—Stephen A. Phillips, B.A.A., B.D., President, Society of Presidents
What is the difference between a government trust fund and a non-government one? The Federal Government, according to Henry Louis Gates, would use the Social Security trust fund (defined as a fixed amount of funds under the Social Security Act) to pay out the remaining Social Security taxes. It doesní¹t have a tax rate (as does the Non-Federal Federal Trust Fund) nor does it require the Social Security Trust Fund to be managed under its own governing system or the Federal Reserve Board.
The reason for this contradiction has been for many years. Social Security has been in crisis since it started to deteriorate under the first President’s reclamation. But for much of the last 50 to 80 years Social Security has also been able to grow, so that it continues to be part of the national budget.
The problem with the concept of Social Security being a non-government system—there, it is a single entity that provides funding to the people of this country—is that it makes no sense to consider government spending an integral part of those public services, especially those of the poor, since it would prevent future Social Security spending in the future.[26]
What are some of the most basic concepts of Social Security and what are their differences? Social Security, as explained by the United States Treasury in 1982, is a government program for the maintenance and improvement of the elderly. Social Security, in contrast, is a government agency providing financial assistance to the people of this country, whether the government accounts for their benefits or not, and not for their needs.[27] Social Security is a public program for the maintenance of the elderly and for the maintenance of the federal government.[28] Social Security is an individual contract. It is not a guarantee that your retirement security will last you a lifetime. No one should depend on the government to make payments for your needs; any government contribution to your pension and other support must be made voluntarily and without penalty, including any federal contribution to your mortgage, loan or other mortgage.[29] It should therefore be possible to give you whatever kind of benefits you need and what kind of program you wish to receive, whether you are entitled to them or not . . . and the federal government should provide to you those benefits for which you would ordinarily be entitled.[30]
This basic basic idea of government spending a government bond under its own system is, however, not the answer to all serious social problems, especially social inequality.
What is social security and what are its different types of programing? Each government program provides the funds it needs to provide care and pensions for the poor and other special needs families. Some examples of those programs included the Social Security Pension Program (SIPP), the Supplemental Nutrition Assistance Program (SNAP) and Medicaid.
The Social Security Trust Fund provides to all Social Security beneficiaries the basic financial support needed to continue care for his or her family.
—Stephen A. Phillips, B.A.A., B.D., President, Society of Presidents
What is the difference between a government trust fund and a non-government one? The Federal Government, according to Henry Louis Gates, would use the Social Security trust fund (defined as a fixed amount of funds under the Social Security Act) to pay out the remaining Social Security taxes. It doesní¹t have a tax rate (as does the Non-Federal Federal Trust Fund) nor does it require the Social Security Trust Fund to be managed under its own governing system or the Federal Reserve Board.
The reason for this contradiction has been for many years. Social Security has been in crisis since it started to deteriorate under the first President’s reclamation. But for much of the last 50 to 80 years Social Security has also been able to grow, so that it continues to be part of the national budget.
The problem with the concept of Social Security being a non-government system—there, it is a single entity that provides funding to the people of this country—is that it makes no sense to consider government spending an integral part of those public services, especially those of the poor, since it would prevent future Social Security spending in the future.[26]
What are some of the most basic concepts of Social Security and what are their differences? Social Security, as explained by the United States Treasury in 1982, is a government program for the maintenance and improvement of the elderly. Social Security, in contrast, is a government agency providing financial assistance to the people of this country, whether the government accounts for their benefits or not, and not for their needs.[27] Social Security is a public program for the maintenance of the elderly and for the maintenance of the federal government.[28] Social Security is an individual contract. It is not a guarantee that your retirement security will last you a lifetime. No one should depend on the government to make payments for your needs; any government contribution to your pension and other support must be made voluntarily and without penalty, including any federal contribution to your mortgage, loan or other mortgage.[29] It should therefore be possible to give you whatever kind of benefits you need and what kind of program you wish to receive, whether you are entitled to them or not . . . and the federal government should provide to you those benefits for which you would ordinarily be entitled.[30]
This basic basic idea of government spending a government bond under its own system is, however, not the answer to all serious social problems, especially social inequality.
What is social security and what are its different types of programing? Each government program provides the funds it needs to provide care and pensions for the poor and other special needs families. Some examples of those programs included the Social Security Pension Program (SIPP), the Supplemental Nutrition Assistance Program (SNAP) and Medicaid.
The Social Security Trust Fund provides to all Social Security beneficiaries the basic financial support needed to continue care for his or her family.
According to Secretary Paulson, Social Security will begin taking in less than it pays out in 2017. This means the government bonds in the trust fund will need to be converted back into currency, which means the national government will need to begin paying back, with interest, the surplus Social Security funds it has borrowed over the years.
By 2041, the Social Security Trust Fund, or the accumulated debt that constitutes the fund, will be gone. According to the Social Security and Medicare trustees annual report for 2008, once this occurs Social Security will be able to pay only 78 percent of benefits promised under the current system.
There are basically two solutions to the dilemma: One is to raise Social Security taxes, the other is to cut benefits. Some have proposed lifting the cap on income that is taxed for Social Security. Currently this cap is $102,000. The problem with this approach is that lifting the cap would also presumably raise the amount of Social Security benefits wealthy contributors are entitled to; which, in addition to the political ramifications, could