What Is The Future Of Social Security?
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What is the future of Social Security?
There is much-heated debate on the issues of Social Security today. The Social Security system is the largest government program of income distribution in the United States. People are concerned that they wont see a dime of what they worked so hard to contribute into the Social Security system for so many years. Social Security provides benefits to about forty-three million Americans. Not only to retired workers, but also to their spouses and dependents of the workers who die prematurely. It also provides benefits to disabled workers and their dependents. Social Security appears to most people like a simple retirement savings account. After all, you generally contribute through payroll deductions, then get money back after you retire. Nonetheless, Social Security is a complex and intricate communal program. By design, Social Security involves massive subsidies from the next generation of retirees to the present, from single workers to married couples. Now that the gigantic post World War II baby boomers generation approaches retirement age, there is concern about the consequences it will have on Social Security. There are basically three options, we can do nothing and allow Social Security to run its course, revise Social Security, or consider privatization of the system.
Historically, the Democratic and Republican parties have clear and opposing viewpoints. Quite simply, the Democrats whole-heartedly oppose change to a program initiated under Roosevelts New Deal. The Republicans consider this social program contrary to capitalism. However, over time the Republicans learned that its popularity with the voters has made this issue untouchable.
According to Congressman Richard Gephardt, the social security was not meant to be the sole source of retirement income but rather as a foundation for retirement to give all working Americans a safety cushion. There will be money in the fund until 2029, so distressing baby boomers dont have to worry. After that money is depleted the revenue from the payroll tax will be sufficient enough to pay 75% of every social security benefit for the subsequent 75 years. But how many burdens should be put on the young and middle age individuals, whose taxes basically pay for government retirement benefits? Sooner or later, cuts in Social Security and Medicare are unavoidable because the alternative major tax increase or budget deficit is far worse. In general, we know what to do: raise retirement ages, tax social security benefits fully, shift Medicare towards “manager care” and correct social security benefits for an over statement of inflation. Naturally, changes need to be made gradually so that todays retirees are the individuals affected. The most practical solution is a mix of tax increases and benefit cuts. This way all generations would be asked to contribute.
Privatization is the most controversial argument in this sector of government. Many citizens believe that they should be allowed to make investments on their own rather than having the government perform this for them. These people believe that by doing so they have more control over their future and more autonomy from the government. Furthermore, they stress that privatization will increase competition, which is the basis of our free market capitalistic society. Many other communities in accord, feel that by investing privately what they are now paying in Social Security would raise economic growth and increase retirement incomes. For the past several decades, the average yield on private stock has excited inflation by seven percent compared to treasury bonds that only exceeds inflation by 2.3 percent. Alternatively, all plans to privatize social security come with an adverse effect. Most noticeably, is the tax increases which are necessary to make privatization work in view of the fact that payroll tax revenues are not adequate to pay both benefits today and the build up of reserves in new personal accounts. As we all know tax increases are not good ways to make friends. However, supporters of privatization argue that public confidence in social security has decoded so far that the only way to restore workers faith in the system is to give them control. They say that