Privatizing Social SecurityEssay Preview: Privatizing Social SecurityReport this essaySocial Security is a big issue in politics today. Many people argue that we should change the system completely by privatizing it, which would set up private accounts in which retirees could receive money upon retirement. There are also many that argue that we should keep the current system that we have because it has stood the test of time. They argue further that we should reform the current system, not throw it away. According to Daniel Mitchell, we should privatize Social Security because it would guarantee all workers would receive money upon retirement and it would benefit the younger workers as well as the older. Social Security should be privatized because the rate of returns would be much greater than in the current system, workers would be guaranteed money upon retirement, it will benefit workers of all ages and it would increase savings.
The Problem
Social Security was created at the end of the 20th century, with a few exceptions, but it has undergone some significant changes over the decades. Its most important features are the following four areas.
1. Reduced annual payments to workers in the new government-controlled system. This makes a smaller benefit payments for people who are already paid more than they need and who aren’t covered either. Those workers with a lower annual payments would be better off without the system, but not everyone would be, as well as with older people who are already covered at some point in their life. This reduces their current benefits and a larger benefit to workers.
2. Increasing the size of the new federal retirement fund, which is used to pay some federal employees the retirement benefits they would have received if the old system was completely privatized. This fund is currently used for public employees of both the U.S. Department of Agriculture and the U.S. Department of Defense. It is not funded because of the need for the old system, but because the money is already available. Social Security, like all Social Security program funding, would become available in a certain way to employees of both the U.S. Department of Agriculture and the U.S. DOD, and the Department of Defense should also make certain this fund is available to other employees. For example, in the previous system Social Security payments to employees were divided by the size of the fund by how long they would last.
3. Increasing the amount of money for retirement pensions. Under the current system Social Security payments would always exceed what is required under the age of 50 for workers to participate in their current benefits. This is because all workers will have the same benefits at age 65. However, many other factors, including the cost of living, aging, health, and other factors such as age, could affect the amount spent on retirement, and the amount invested in pensions, which are not subject to the current system. Social Security payments are not subject to this rule of operation in the federal system because workers are not covered at age 55. Also, as many as five percent of the Social Security funds in the federal systems, which are covered by the current system, are being redistributed to their employees without their full and proper financial obligations. If their wages exceed the standard and regular pensions for workers, they do not see their pensions increase.
4. Increasing the amount of benefits paid to working age adults. In the current system Social Security workers who earned less than 50 percent of their discretionary income would have full and adequate Social Security payments. In the current system workers who earn over 50 percent (of their discretionary income) would have insufficient Social Security to continue to work over the age of 50, and it would be possible for them to retire in the later years of their life. Thus, a worker earning less than 50 percent of his discretionary income would be eligible for payments of more than 80 percent of his discretionary income.
According to Daniel Mitchell, this issue has been debated over and over during the last several years by the political class and private interests. It really has been a topic of discussion from a number of perspectives and a growing number of media articles and blogs and online commentary, as well as articles published and published online in numerous news outlets. A number of people are saying that our system is being privatized and it is time to pass Social Security privatization, by increasing the amount of benefits that are being made available to retirement people, by encouraging older workers to continue paying less in social security, by expanding the available budget for Social Security, by increasing tax credits and other programs, and by making Social Security more generous to seniors.
We must stop selling our nation’s capital to private interests that benefit from the privatization of our Social Security program. It
The Problem
Social Security was created at the end of the 20th century, with a few exceptions, but it has undergone some significant changes over the decades. Its most important features are the following four areas.
1. Reduced annual payments to workers in the new government-controlled system. This makes a smaller benefit payments for people who are already paid more than they need and who aren’t covered either. Those workers with a lower annual payments would be better off without the system, but not everyone would be, as well as with older people who are already covered at some point in their life. This reduces their current benefits and a larger benefit to workers.
2. Increasing the size of the new federal retirement fund, which is used to pay some federal employees the retirement benefits they would have received if the old system was completely privatized. This fund is currently used for public employees of both the U.S. Department of Agriculture and the U.S. Department of Defense. It is not funded because of the need for the old system, but because the money is already available. Social Security, like all Social Security program funding, would become available in a certain way to employees of both the U.S. Department of Agriculture and the U.S. DOD, and the Department of Defense should also make certain this fund is available to other employees. For example, in the previous system Social Security payments to employees were divided by the size of the fund by how long they would last.
3. Increasing the amount of money for retirement pensions. Under the current system Social Security payments would always exceed what is required under the age of 50 for workers to participate in their current benefits. This is because all workers will have the same benefits at age 65. However, many other factors, including the cost of living, aging, health, and other factors such as age, could affect the amount spent on retirement, and the amount invested in pensions, which are not subject to the current system. Social Security payments are not subject to this rule of operation in the federal system because workers are not covered at age 55. Also, as many as five percent of the Social Security funds in the federal systems, which are covered by the current system, are being redistributed to their employees without their full and proper financial obligations. If their wages exceed the standard and regular pensions for workers, they do not see their pensions increase.
4. Increasing the amount of benefits paid to working age adults. In the current system Social Security workers who earned less than 50 percent of their discretionary income would have full and adequate Social Security payments. In the current system workers who earn over 50 percent (of their discretionary income) would have insufficient Social Security to continue to work over the age of 50, and it would be possible for them to retire in the later years of their life. Thus, a worker earning less than 50 percent of his discretionary income would be eligible for payments of more than 80 percent of his discretionary income.
According to Daniel Mitchell, this issue has been debated over and over during the last several years by the political class and private interests. It really has been a topic of discussion from a number of perspectives and a growing number of media articles and blogs and online commentary, as well as articles published and published online in numerous news outlets. A number of people are saying that our system is being privatized and it is time to pass Social Security privatization, by increasing the amount of benefits that are being made available to retirement people, by encouraging older workers to continue paying less in social security, by expanding the available budget for Social Security, by increasing tax credits and other programs, and by making Social Security more generous to seniors.
We must stop selling our nation’s capital to private interests that benefit from the privatization of our Social Security program. It
The first side to this argument is that we shouldnt privatize social security but instead reform the current system that we have (Deets 1). Horace Deets is the executive director of the American Association of Retired Persons and is an advocate of reforming the current system and not privatizing it. Deets argues that privatizing social security would destroy a sound system that has stood the test of time for many decades. In the current system workers pay a portion of their income into the system where the government uses it and pays the workers back upon retirement. Deets goes on to argue that without social security nearly half of the nations elderly would live in poverty. There would be widespread poverty among the elderly or those about to retire if the system was privatized because if younger workers were allowed to drop out then it would reduce the benefits that older workers and the elderly currently receive (Deets 3). Under a private system the funds would not be inflation-proof and the amount of money received upon retirement would be based on your investment skills. Many say that thats unfair because under the current system the investment risk is spread out, providing a more predictable retirement income (Deets 3).
However, there is a flipside to this argument. Many people believe and support the privatization of social security. Daniel Mitchell is the McKenna Senior Fellow in Political Economy for the Heritage Foundation and is an advocate for the privatization of Social Security. According to Mitchell, privatizing social security would increase a retirees returns by up to five times as much money as the current system provides. Instead of paying up to 12.5 percent of their incomes to the government where its spent immediately, workers would set up private accounts where the money they send in is invested into stocks and bonds (Mitchell 2). This would produce a much higher rate of return than the current Social Security system. Workers could switch into this system anytime during their careers and would have the option to stay in the current system if they wish (Mitchell 2). Older workers who have been paying into the current system would be able to collect what they have paid into the old system as well as receive the benefits from the new system upon retirement if they were to switch to privatized accounts. This assures that its fair to all who pay into Social Security (Mitchell 2).
Mitchell presents a clear and easily understood argument that social security should be privatized for a lot of reasons. Unlike the current Social Security system, the privatized system would be like private property. Workers would have their own private accounts that could not be touched by the government, and unlike the current system, retirees would be guaranteed all of their money upon retirement. If social security were privatized, workers would be able to save up much more money and receive a lot more upon retirement than they would today. Instead of sending up to 12.4 percent of their income to the government today, where its usually spent immediately, they would send it to private retirement accounts where it would be invested into private stocks and bonds (Mitchell 2). This would be a beneficial financial advantage to all workers because the The Institute for Research on the Economic Taxation found that private investing can allow a worker to retire with five times as much money as the current system can provide.
Despite this, there are many skeptics that doubt that could work. They worry about the older workers who have been paying into the system for many years. Most analysts agree that younger workers will benefit since they havent been paying into the current system for very long or at all, but how would older workers benefit from the privatization of Social Security (Mitchell 2)? Workers could set up private accounts anytime throughout their