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Discuss the social security system. Why was it created and what are its current problems?

2007-12-11 04:27:25 · 3 answers · asked by Anonymous in Politics & Government Government

3 answers

This question sounds like a homework assignment.

You can read up on why it was created.
The current problem is we are headed toward a time, and its soon, that more money will be being drawn from social security that people are paying in to social security.
Most experts estimate it will be in the red so to speak ( again paying out more money than its taking in ) within 5-7 years.

2007-12-11 04:32:03 · answer #1 · answered by sociald 7 · 0 0

The Federal Insurance Contribution Act (FICA) was created during the Great Depression to address the single greatest economic problem: consumer confidence.

Social Security is not about paying out of money, it's about confidence. People were hoarding their money against further disaster, and medical problems and retirement were among them. Social Security taxed about 8 working people to offer an immediate relief to 1 person, and the act of making the program available did two things: it helped people who were in need, and it relieved the general public of fears. When the public is less afraid, they stop hoarding their money, and when they start spending again, the economy is fueled.

Today, social security is a welfare program. The fear is gone and people are simply looking forward to getting the money. People are living longer and spending more years in retirement. Social security is now carrying a heavier burden as a result, and so the ratio of taxed workers to retired is trending toward 3 to 1 or 2 to 1.

The lower ratio creates a liability for the federal government. If 8 workers can provide $800 for one retired person, they pay $100 each. If 3 work for each retired, they have to provide $266 each. The only way to succeed is to raise the social security tax or push back the retirement age (to shorten the number of years people collect). There have been many times when social security was fixed, and both of these methods were used.

(To remain faithful to FDR's goals, the retirement age for collecting has to be pushed back to 79 years because that's our current life expectancy.)

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Someone got the current tax wrong. The tax is 7.65% for us and matched by our employers. The total tax is 15.3% for every dollar earned.

2007-12-11 04:36:13 · answer #2 · answered by Anonymous · 1 0

It was created during the Depression by Franklin Roosevelt. He was a typical do-gooder Democrat, using government to help the unfortunate. It was supposed to be a safety net for people who were being forced to retire at age 65. At the time, the life expectancy was less than 65, so the Dems were not planning on paying too many people.
Later SS benefits were given to dependents. And SS benefits were given to the disabled.
FDR originally set the SS tax at 3% and promised it would not go higher. It is now at 13%.
It is a giant Ponzi scheme, where lots of people were paying in and few were getting benefits. Now lots of people are getting benefits and there won't be enough money coming in, in the future, to adequately fund the program.

2007-12-11 04:35:59 · answer #3 · answered by regerugged 7 · 2 0

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