should social security be reformed or abolished?

Question

How can it be reformed? What would be done if it is abolished? And why is it a better idea to reform/abolish it?

Answer 1

When the program was set up more than 70 years ago, President Roosevelt made sure it was done in such a way that it could never be completely eliminated by coming up with the concept of a trust fund that could only be used to pay benefits. - People like you who are paying into the social security trust fund now, will not stand for getting nothing when you are ready to retire - And 50 years from now younger workers will still be paying into the social security trust fund and their payroll taxes will be available to pay beneficiaries something.

We need Social Security now more than ever, as few people now have pension plans that will pay them a guaranteed income for life.

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 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 on Youtube here:

http://tinyurl.com/2x4r25

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 that FICA taxes are much like retirement savings - The law states that they can only be used to pay social security and medicare benefits. -

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. We should put pressure on Democratic politicians to show the courage to start talking about rolling them back - not to pay for new programs - but to keep the government solvent.

In order to take the high moral ground Democrats must show some courage and 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. But in any event, the press and politicians have an obligation to explain to the public that it is not social security but the rest of the government that needs reforming. Neither the Democrats nor the Press have done their job.

Answer 2

It should be abolished by phasing it out slowly, so that people get the money that they and their employers put into it up till now. Ths same applies to its companion program, Medicare.

As a last resort, it could be reformed by ramping the eligibility age up to 70 and reducing the monthly payments by 10% now and another 10% five years from now.

If it is abolished, people would start saving more at a younger age. Companies would invest more in their businesses, which would reduce unemployment, and incerase the number of people that have jobs and pay taxes. This would make the economy stronger.

We will go broke if we continue to shell out all that money to pay for Social Security and Medicare, and other "entitlement" programs. Our grandkids will take the hit. Some legacy, huh?

Answer 3

The problem with abolishing it is that people have been paying into it for decades. Making it suddenly go away, that would be like arbitrarily canceling an insurance policy after paying years of premiums. It's not fair to those who have paid into the system.

As far as reforming it, the first step would be making it optional, rather than mandatory. If someone did not want to participate in that particular govt-sponsored retirement package, they should be allowed to choose something else to do with their money.

Once we have an estimate of how many people would choose to participate if the program were voluntary, it would be more possible to start developing reasonable business plans based upon those numbers.

Answer 4

If it were to be abolished, I want all of my money back, darn it!
The truth is, old people can't work at a certain point...now what do you suggest we do with them? Not many families can afford to support their elderly parents completely, and SSI is very necessary for their survival (meager as it may be). Sure people should prepare for retirement, but that doesn't change the fact that most won't/can't. A way to reform it would instead of spending the countless billions on an illegal war, perhaps we should pump those funds into our own people, including our floundering SSI program. Just a thought.

Answer 5

Social Security is all I have to live on when I retire ~~~ I paid into it since I was 16 years old working under a hardship work permit in New York state. (Our mom was alone with five children ~~~ dad died in the Korean War)

They better reform it or Washington, D.C. is going to see a "Gray Hair Revolt" that will make the bravest Congressperson shutter.

We are the war babies that cut our teeth on 'the Civil Rights Movement'. We grew up with our parent's work ethic because they came through the Depression Era.

No one steals a hard working persons rightful retirement without a fight!!!

Answer 6

Reformed.

They should quit pilfering the money to finance more debt and invest some of the trust fund in stock and other high return investments.

There should be additional reforms on what people can privately save/invest for retirement as well.

Answer 7

Social Security should be reformed as follows, all members of Congress should be forced to give up their retirement plan and rely solely on social security. They would have it fixed over night and they would never steal money from it again. Of course they will NEVER allow that to happen.

Answer 8

Make the taxation system more fair, example a firefighter makes $46,000.00 per annum and pays 6 .8% of that into SS, Bill Gates salary alone is $901,667 so since only the first $80,000.00 is eligble for SS tax his effective rate is actually .006%, if we simply lifted that ( which Gates himself advocates) we would be solvent for so long the problem would virtually disappear

Answer 9

Reformed and optional

Answer 10

It should reformed and the taxes should be taken from everyone, all year with no ceiling, then it would always be there. Are you not glad they (R) didn't make you put it in the stock market?

Answer 11

I will o for reformed since there will always be some people too stupid to save for their own retirement and of course some people who just need it.

Take all able bodied people on welfare and boot them off, put that money towrds SS for those who really need help, then allow us to use our "contributions" to sve for our own retirements instead of supporting others with it.

Plus for those now on it, only let those who paid in to collect, not their spouses whom never worked.