Social Security Reform?

Question

I am writing a paper for a Social Science class. It is a position paper 3-5 pages in length written to a senator in letter form on any topic relating democracy and government. I need to have 3 arguments for the body what should they be? Any tips on what to write about would be great. Thanks for all your help.

Answer 1

You will find that Social Security Reform is a very interesting topic if you take a little time to study the history of social security and past reforms.

You have probably heard that the program is financial trouble. Perhaps you have heard President Bush's statement that the system will go bust in 2042, but it is not that simple.

Not one member of congress has come forward and openly discussed the real Social Security problem. It is a moral issue which effects both the baby boom generation and the next generation of younger workers; and it can not be understood without a brief history lesson:

Until 1983, Social Security was a pay as you go system - a contract between generations, where the younger generation paid for the retirement of the previous generation. Although next to nothing was saved in the Social Security Trust fund, the system worked well - because as the wages of young workers increased with inflation, larger benefits could be paid to retired workers to protect of them from the effects of that inflation. But late in the Carter administration, Congress recognized that the retirement of the Baby Boom generation would put an unfair burden on the next (smaller) generation of workers unless changes were made to the system.

As a result of the 1983 reform package, the retirement age was scheduled to gradually be raised to 67 in order to account for longer life spans and social security taxes on wages were increased by about 1/3, in order to build up a real trust fund to help pay for the retirement of the baby boom generation. As a result, the trust fund has built up a surplus of over 2 trillion dollars - and the baby boomers became the first generation to pay for their parents' retirement while providing for their own as well. By one measure, the 1983 reform package has been wildly successful, as the surplus in the trust fund is now predicted to last at least until 2042, when the oldest baby boomers will be 96 years old if they are still alive. (Even then Social Security will not be broke - It will just have to go back to the old pay as you go system - which may not be much of a problem if the economy has done well and most of the baby boom generation is dead.)

Even the most pessimistic estimates say that the the system will be able to pay about 70% of promised benefits in 2042 with no changes. These estimates assume that the economy will grow much slower than it has in recent years and that life expectancies will continue to get longer. And nobody can really predict what things will be like 35 years from now. There is a reason that politicians like President Bush focus on 2042: - The law says that the social security trust fund can only be used to pay social security benefits. And the bonds in the trust fund are legally evidence of a debt. Nobody expects the government to default on the bonds, so the President has to come up with an excuse to not pay them off on schedule. By convincing the public that the system will go bust in 2042, he has an excuse to cut benefits in order to build up a bigger trust fund that the government can borrow and not pay back.

When the social security reform legislation was signed into law by President Reagan on April 20, 1983, he said:

"We're entering an age when average Americans will live longer and live more productive lives. And these amendments adjust to that progress. The changes in this legislation will allow social security to age as gracefully as all of us hope to do ourselves, without becoming an overwhelming burden on generations still to come.

So, today we see an issue that once divided and frightened so many people now uniting us. Our elderly need no longer fear that the checks they depend on will be stopped or reduced.

These amendments protect them. Americans of middle age need no longer worry whether their career-long investment will pay off. These amendments guarantee it. And younger people can feel confident that social security will still be around when they need it to cushion their retirement."

You can view President Reagan's complete speech here:

http://www.youtube.com/watch?v=0-91W5LS0E8

In order for the 1983 reforms to work, congress and the president would have had to act responsibly and not treat the social security trust fund as if it contained free money that could be spent and never paid back. And early in his first term, President Reagan did promise to balance the Federal Budget by 1983.

The problem of course is that we have had an orgy of income tax cutting that has primarily benefited the rich and massive budget deficits under the administrations of Reagan and Bush I and II. Because the baby boom generation has not yet started to retire, last year, congress was able to borrow and did borrow a record 186 billion dollars from the social security trust fund (in addition the approximately two trillion dollars that have already been borrowed and spent), every penny of which was paid for by FICA taxes on the wages of working people - and congress has no plan in place to pay it back when it is needed to pay for social security benefits.

This borrowing has masked the true size of the federal budget deficit. President Bush has stated that the fiscal 2006 budget deficit was 248 billion dollars.. But this figure does not include the 186 billion borrowed from the social security trust fund last year, nor does it include the approximately 100 billion dollars per year cost of the war. From Fiscal 2002 to Fiscal 2006, the Federal Government borrowed approximately 2.4 trillion dollars, including borrowing from social security trust fund. That 2.4 trillion dollars in borrowing means that from fiscal 2002 to fiscal 2006, approximately 1/4 of non social security government spending was financed with borrowed money. (See www.ctj.org/pdf/def0706.pdf)

The lowest paid minimum wage worker and a person making $97,500 per year pay social security (FICA) taxes at the same percentage rate. On wages over $97,500 workers only have to pay the relatively small portion of the tax that goes to support Medicare. The justification for this is that FICA taxes are like retirement savings.

When President Bush complained (in his 2005 State of the Union address) that in 2017, the trust fund will be paying out more than it takes in and when he calls the trust fund a "worthless bunch of IOU's," he is in effect asking for "debt relief." He wants to find a way to avoid repaying the debt to the trust fund so that he can preserve his 15% dividend and capital gains tax rates and his other tax breaks which primary benefit the rich.

It is true that the government bonds in the trust fund don't have economic value like a piece of real estate or stock in a corporation that pays dividends- but they have legal value (they represent a promise by the government to repay a loan when payment is due.) -

But more importantly, they have a great deal of moral value. The moral issue is: Is it right to borrow and spend somebody's retirement money and not pay it back. If the CEOs of a big corporation (like Enron or World Com) had taken all the money from their employees' pension plans and replaced it with a bunch of worthless stock or worthless IOUs, they would be headed to jail. - Moreover, is it right to keep collecting FICA taxes from workers at a rate that creates a surplus, if the government is going to keep up this borrowing and use it to finance income tax cuts for the rich with no plans to pay the money back when it is needed to pay benefits? (In addition to the 2 trillion dollars of social security surplus already borrowed, the government plans to "borrow" over a trillion dollars more of surplus before the well runs dry around 2018.)

In the alternative, is it right to maintain tax cuts for the rich and pay back the retirement money borrowed from the social security trust fund by passing the entire cost of doing so on to the next generation - something the 1983 reforms were intended to avoid?

My personal view is that we should immediately roll back all of the Bush Tax cuts, and then roll back every other tax cut for the rich that has been enacted since President Reagan until the operation of the government is fiscally sound. President Bush believes it is more important to maintain his tax cuts because they have a stimulative effect. - But crack cocaine also has a stimulative effect and that doesn't mean it is a good thing.

The new Democratic controlled congress has no plans to beginning discussing rolling back the Bush tax cuts. I suggest you write to a Democratic senator and ask him or her to show the courage to tell the public the truth about social security and to have the courage to at least start talking about rolling back the Bush tax cuts - not pay for new programs - but to keep the government solvent. I would like to see one senator or congressman stand up and say "The real problem with social security is that we have been borrowing the money set aside for retirement benefits and spending it - and we have no plan in place to pay it back.

In order to take the high moral ground Democrats must recognize that they had a hand in creating the big deficits of the past 23 years and they must be willing confront the real issue. Both parties have been buying our votes with borrowed money for far too long.

Answer 2

Every year we pay into social security. Every year so far there has been a lot of money left over. The money was supposed to be saved for times when there would be a short fall. Congress, I think back in the 1960's, saw that the population seemed to always grow, so they changed the rules. Now they spend every dime. There is no bank account with our retirement savings in it. Congress sees a day when we won't take enough money in to pay the starving seniors, so they want to cut how much of that
money they return to them. That way they will still have some money to spend on other stuff, like a nice raise for themselves.

Answer 3

Why do they keep cutting and cutting services that most need? Where are the elderly expected to go with so many Dr's refusing medicare? Why are they going to give illegal immigrants social security with less in-put and less active time than people who have paid in for a lifetime? How do they expect people to put money away for retirement when the majority can barely get by? Why hasn't the government put back the money that was already in there, that they took for other things? If they are going to continue to cut things and raise out of pocket expenses....what is the government going to do to insure the elderly can get employment for what they are capable of doing?

Answer 4

I won't give you your three arguments, but ask your senator why neither he nor any other senator signed the petition of the Miami Dade county voters who didn't have their votes counted in the 2000 presidential election. How can we expect to have a democratic republic when many votes are ignored?

Answer 5

the super threat to social protection is that that's a social application. that's being purposefully mismanaged with the intention to scrap it in choose of the privatized making an investment companies that should earn extra money off of you retirement supplies. besides it won't be able to run out of money. it could in simple terms run out of surplus money used to pay out extra advantageous than it collects. in certainty as long as there's a paintings stress paying into it it could have money. the comparable subject is happening to the standard public college gadget. It is likewise being mismanaged so as that folk will scrap it for deepest faculties which will benefit an elitist shape.

Answer 6

Write about the lack of social conscience in America!

Answer 7

Have you checked the markets lately ?