SPRING BREAK BLOG: “Get to work on Social Security”
Jack Z. Smith
April 1, 2008
Former House Majority Leader Dick Armey once asked, “If Social Security is such a great program, why is it mandatory?”
Actually, Social Security is a great program precisely because it is mandatory. Ninety-six percent of American workers pay into the system. As a result, Social Security has a strong, steady flow of funding that has made it a tremendous safety net for the nation.
Along with Medicare, Social Security has played a huge role in slashing the poverty rate for the elderly from about 30 percent to less than 10 percent over the last 40 years.
This year, almost 50 million Americans will receive $608 billion in Social Security benefits. Nine out of 10 people 65 and older receive the benefits. Among the elderly, 52 percent of married couples and 72 percent of singles receive more than half their income from it.
If Social Security had not been made mandatory, there would be a much higher poverty rate among the elderly today. Many Americans wouldn’t put money into retirement savings unless required to, just as millions of workers today don’t participate in voluntary corporate 401(k) programs despite their attractive features.
The program’s benefits have served as a crucial financial lifeline for several of my relatives, including my maternal grandmother. As a widow in her twilight years, she scraped by with Social Security as her primary source of income.
Social Security has been on my mind because its trustees released their annual report last Tuesday on its projected long-term funding shortfall.
Although the program currently is generating surplus revenues, its cost is projected to exceed incoming revenues by 2017 as more baby boomers hit their rockers. By 2041, the trust funds are projected to be exhausted, leaving incoming payroll tax revenues to pay only 78 percent of benefits.
But if we make some adjustments, the program can be put on a sound financial footing for many decades to come.
That probably will require increasing payroll taxes and some very modest, gradual reductions in benefits. Congress adopted bipartisan Social Security reform legislation 25 years ago and can do so again.
The payroll tax is levied only on the first $102,000 of annual income. That cap could be boosted appreciably, perhaps to $150,000 or $200,000, and indexed to inflation. Even if the cap were $200,000, affluent people earning more than that still would pay a smaller percentage of their income into Social Security than do low- and middle-income workers.
The payroll tax rate, now 12.4 cents per $1 of earnings (half from workers, half from employers), could be raised modestly – perhaps a half-cent.
Some benefit cuts might be made. For example, the age for receiving full retirement benefits might be raised very slightly and very gradually, because people are living longer.
Several million state and local government employees currently not paying into Social Security might be brought into the system, as federal employees were in 1983.
Greater protection should be provided to the trust funds to ensure that Congress and the White House stop (or at least greatly decrease) the shortsighted practice of spending surplus Social Security revenues for other government programs.
President Bush’s departure from the White House in January could ease congressional passage of bipartisan legislation to strengthen and preserve Social Security for future generations. The sooner that strong legislation is adopted, the less severe the remedial measures must be.
If you don’t believe me when I say that this is a worthy program, you might recall Bush’s words on May 15, 2000, in Rancho Cucamonga, Calif., when he was campaigning for president. Social Security, he said, is “the single most successful government program in American history.”
NC – Connection
I agree with Bush when he says Social Security is the single most successful government program in American history. Without social security literally all of the elderly that don’t work would be poor, and that would either make them homeless or very dependent on their children to take care of them, but what if they don’t have children that just makes them poor, and most likely homeless. In class we have had many discussions on how social security will run out for our (the students) generation, because of the baby boomers, and now it’s finally brought up in an article. But will it really run out? If they did raise it by a penny or two on what we put into it would it really help, I hope so. That is a small gain, which hopefully won’t take too much more money out of our paychecks, but if its going to help me live in the long run then I am ok with it. I do not think they need to rise the age of which you can start benefiting from it. It is already in the 60’s why raise that it is a very unnecessary action. Social security helps a lot of people and I hope there is a solution to fix its end because I know I will most likely have to benefit from it when I get to be old.
So here we have an issue of entitlements. Social Security is a system of entitlements because it is set up to pay a certain amount of money to all persons within a certain age group, with only a few limitations. Entitlements like Social Security create uncontrollable expenditures in the budget, because the government cannot control how many people retire in one year, no more than it can control how many people are born each year. The current problem is that the generation of retiring age is larger than the generation of working age, so there might not be enough money for everyone. The reforms proposed in this article are awfully simplistic, but sound reasonable: make more affluent people contribute to the fund, raise the retirement age gradually and decrease benefits slightly. People live longer now, so logic would suggest that they should work longer. Of course, any kind of alteration to Social Security will probably take years to pass and will not be as easy as Jack Z. Smith thinks. Congress is a wonderfully tedious and deliberative body, and on an issue like Social Security, heavily influenced by constituents. Old people don’t like any talk of raising retirement age or decreasing benefits, so any change to the current system would have to be heavily negotiated and implemented incrementally.
Ah, Social Security. What a fun topic! Now, I know that such a social welfare program as Social Security may in fact, be on its way out. And this is the first source of information that I’ve seen that is saying otherwise. Personally, I’d love for Social Security to still be around by the time I’m eligible to reap its benefits but unless someone has a crystal ball – who knows? Social Security is one of our nation’s largest entitlement programs. Entitlement programs include benefits that certain qualified individuals are entitled to by law, regardless of need. Social Security, however, is” living on borrowed time”. As the number of retirees grows, and their average benefit is constantly increased to cover the cost of living, Social Security expenditures are going to increase. I definitely consider this a huge problem. Pretty soon, a huge tidal wave of “baby boomers” is going to be retiring and will be requiring more benefits. I actually agree with the author of this article. If we can cut back on the actual benefits and continue to push back the age at which benefits would be received, there’s a chance we could save the program. If it also means taking more money out of my income, I’m ok with that (at least for now) because like Cody said, it’ll help me in the long run.
Oh social security, what a mess! I think this is one of the few positive articles I’ve read on the subject in quite a while, however I gravely disagree with it.
First off, how is social security Constitutional? Remember when it was first passed? The Supreme Court didn’t think it was so great, and did find it unconstitutional, so FDR just put more justices on the court who sided with him on the issue. That sounds a tad bit corrupt to me.
I understand that social security was put in place during the Great Depression to help the people in the long run, but it wasn’t necessarily meant to become permanent, and I don’t think it should have been. It had a good intent, but it’s failing. The Great Depression showed that people didn’t plan for the long run and retirement, however, just because of that instance I should not have to let the government control my money. I don’t understand why the government should take on a responsibility that is my own. What if I could do a better job? In fact, I’m sure I could. I mean, what DOES the government do right? To me it seems like they really mess up a lot of things. Why would I let them handle my retirement money? I might never see the money that I worked hard for.
If people don’t save for retirement it’s their own fault. I understand that it’s a hard thing to do, and bad things happen, but people need to plan for that. It’s not impossible. If the government wants to fix this they need to make paying into social security optional. If people want it, and pay into it they can get it when they need it. If they don’t they can save on their own. If I had the money I will pay into this I would probably choose to save it, and if I found a good opportunity invest it, and make more.
Well we all know that Social Security is the largest uncontrollable expenditure we have, which is when Congress determines expenditures not by a fixed amount of money appropriated but by how many eligible beneficiaries there are. I know that it will be quite a while until I become 65, but I would love to have Social Security to stick around so I can reap the benefits of receiving money especially if the government took money out of my paycheck for Social Security. I agree with this article that we should raise the age for the elderly to receive Social Security and raise the 12.4 cents of every $1 to a half-cent more. With the “baby boomers” becoming the retirees, our national debt so high, and 1/3 of our budget being used on Social Security, it would be a good idea to cut back on some of the benefits and raise the retiring age. If we do not set new grounds for the Social Security program, then we will probably have to get rid of it and a lot of people will not be happy with that. Of course old people do not want to hear about “changes” to their Social Security so it will be interesting to see if the government decides to make changes to the Social Security program.
Social Security most definitely serves as a safety net for millions of Americans: my dad recently informed me that only a handful of his employees participate in his company’s fairly generous retirement program, and those few are too old to actually benefit much from it. The majority of his hourly workers plan to draw on Social Security. I do not know much about Social Security except that it was implemented as a result of the Great Depression and, as an entitlement program, classifies a third of the nation’s annual budget as an uncontrollable expenditure. Social Security may be the greatest program ever implemented in US history, but it’s going to hit a wall very soon, which makes me vaguely nervous, since my peers and I will be reaping the consequences if nothing is done soon. The baby boomer generation is reaching retirement age, meaning more people will be drawing on Social Security than investing in it. Personally, I do not believe the program needs to be abolished, but I agree with the author that some adjustments need to be made. Raising the cap is a good idea and honestly, I think people could sweat a minor increase in payroll taxes, if they value their retirement at all. Nevertheless, a reduction in benefits and raising the retirement age is going to, without a doubt, create a royal fuss orchestrated front and center by none other than the AARP, our nation’s largest interest group. The author of this article obviously has oversimplified the issue. Congress isn’t just going to snap its fingers, pass the needed legislation, and then go out to tea, not when there are constituent votes at stake. I foresee a long protracted period of bickering.
Re: Castor.
Oh, but we do need to make the retirement age higher. We need to. When Social Security was established the retirement age was higher than the life expectancy. The U.S. life expectancy is now 78, and doctors are talking about our generation living to 120, our children’s generation to 150; that may be a bit of a hyperbole; it may come to pass or it may not, but We surely can’t afford to write Social Security checks to over half the population while less than half pay in; that’s just silly.
Re: No-bake Evans
Why can’t the government control how many people are born each year? Or for that matter, how many people die each year? And you say it will be hard? Reforming Social Security will be hard?
Re: Larson
I have absolutely no idea why you think Social Security (the social welfare program, that is) is on the way out, and if this is the first contrariwise evidence you must not read much about the “fun topic” of social security. And Social Security isn’t just one of our largest, it’s our largest entitlement program; it alone accounts for almost 1/3 of the entire U.S. federal government budget.
Re: Vertullo
Not thinking that Social Security is constitutional doesn’t have anything to do with the article; it doesn’t mean you should agree or disagree with the potential ways to fix it. Nor does the potential corruption of the evil socialist FDR. And no one is stopping you from managing your money. And “if people don’t save for retirement it’s their own fault.” ? So, because American citizens are irresponsible we should let the older generation fend for itself, beg on the streets and dig through dumpsters? You have a grandmother: grandmother Vertullo; it could be her on the streets. They got in a car crash, it’s their fault; let’s not bandage their wounds, especially if we have to use their gauze. I mean, I’m sure they can handle their first aid supplies better than we can.
NC – Connection/Proof Read
Social Security is something that I believe to be a very touchy subject. This is something that can ether be very successful or very unsuccessful. I believe that if we utilize the resources that we have and make little changes like the author purposed in this passage that this is something that will not only be around for his generation, but ours and the many that will fallow. I also think that with the national debt the way that it is we need to make previsions to make sure that Social Security isn’t touched and it will be there for the long hall. By making sure that the government is not using Social Security funds for anything other then what it is actually made to be used for. I also think that the way that Americans manage their money is not very proficient and if they were given a real choice in the matter of putting away funds for retirement they wouldn’t, and then we would have a huge problem in the poverty rate of the retired persons. So if we just make some changes and make it so that there will be Social Security I believe that our nations people young and old well soon reap the benefits of it.
Social Security, the thrilling music to old folks and the graining drum to tax payers. What a beautiful thing! I knew that because of all the baby boomers, my parents included, were growing old enough to get the benefits they’d been paying for so many years that Social Security would fall through. The fact is that the generation of many (baby boomers) didn’t produce as many as their generation. By mathematical logic, a lot are taking from a little, so there is going to be debt. “ Although the program currently is generating surplus revenues, its cost is projected to exceed incoming revenues by 2017 as more baby boomers hit their rockers. By 2041, the trust funds are projected to be exhausted, leaving incoming payroll tax revenues to pay only 78 percent of benefits.” It’s just like the national debt. The government pays more out than it’s actually getting back. Actually, one of the major sources of national debt is Social Security. One thing that really got me was that the government is actually spending the excess instead of saving it for the upcoming loss of funds! “Greater protection should be provided to the trust funds to ensure that Congress and the White House stop (or at least greatly decrease) the shortsighted practice of spending surplus Social Security revenues for other government programs.” The government has the gall to spend the excess when it know that in a couple of years there won’t be any more money coming in to help the elderly! What jerks! The government doesn’t seem to look to the future. It looks at the past and the present that only benefits them! Anyway, back to the actual program, Social Security. We’ve talked in class how Social Security is a generational contract. A commitment between each generation to help the previous. The baby boomers paid into the funds to help their parents and in turn the baby boomers’ children will in turn pay into the funds to help them. It is a fairly sound system, despite the problems now faced. There aren’t as many workers to put in the funds for the baby boomers. Change needs to happen so that this system will stay intact!
SSEMB
I hear all the time about how Social Security is failing and how our generation is going to get the short end of the stick and be left without any money in our old age. What I haven’t been hearing, which this article provides, are possible solutions to remedy this problem. From everything I’ve read recently or talked about, everyone’s opinion of Social Security seems so negative, like it’s a lost cause. I definitely think that Social Security is a good thing. My grandfather is in his mid-eighties and he’s been suffering from Alzheimer’s disease for a while, and the cost of his medication and care has been very expensive. He’s also got a wife who likes to spend the money they don’t have. I like knowing that they have that safety net in that little bit of income coming in, because it’s not like they could go find jobs. I think it’s a program that’s been very successful, but I do think that with the huge population increases and the upcoming graying of the “Baby Boomers” it is going to become even more problematic. I definitely agree with the author. I think the caps are a good idea and I think that we could handle a slight tax increase. If it’s important enough, which I think if people can see the benefits of it, they will see that Social Security is something that needs to stick around.
Social Security… does it have a secure future? As an entitlement program that serves a vast number of Americans, it requires the biggest chunk of the national budget to “operate.” And like our AP book maintains, “Social Security is less an insurance program than a kind of intergenerational contract.” I feel that that is a fair statement. The issue that we face today, and subsequently the future, is whether this program will be around within 50 years or so. I think that the fears we have about the incoming “baby boomer” generation (1946-1964 births), who compromise nearly 30% of the American population, are legitimate. After all, Social Security is the prime source of income for most elderly citizens in this country. I think that the few suggestions that the author made regarding changes to the program are very reasonable, and very realistic. I believe that without a doubt, SOMETHING within the program is going to require modification because 30 years down the road, this program is most likely going to begin experiencing shortfalls. A retired generation larger than a working generation is obviously going to create some problems. Sure, some of the proposed changes will generate some controversy (i.e. gradually increasing the benefits age), but I think changes like that are inevitable. Social Security has been the most successful government program this country has ever seen, and I have faith that we will “adapt” it to ensure the welfare of future retirees.
This guys has a good plan I guess but like grace said its made to look really simple when in actuality its not even close. First of all like we learned earlier in first semester social security is the third rail of politics which is so true. The reason this is true is because there are a lot of old people and they actually vote unlike us. They all get out there so the politicians listen to them. That is why it is the third rail of politics because old people go crazy if there is any mention or even a whisper of making the qualifying age for benefits higher or cutting benefits or anything like that. So I don’t know if we have enough bold politicians that will put their neck on the line to invoke serious change. I think there are two reason that are contributing to the social security problem. First the government is just screwing it up by spend the excess money and taking loans against it and the many other things the government is doing wrong. Secondly there is an unfix able problem, more people are retiring than those who are working. So working with the current concept of were the working are paying for the retiring is not working so well. There is no way to fix that problem because social security is an entitlement. So the government cannot cut back on its spending unless they change the benefits and the eligible age of receiving benefits.
I’ve heard to arguments before about how with all the baby boomers entering into retirement soon, the generation of workers that support them won’t be able support them all. Although there is always to choice of cutting benefits, any politician who says those words probably won’t have too much of a political career afterwards. Our social security system is an entitlement system. That means congress has to pay X level of benefits to Y number of recipients, so naturally as the number of recipients goes up, the number of benefits (or amount of money to maintain those benefits) as to go up to. It’s a directly proportional system in math terms. The purposed solutions sound simple, make more wealthy people contribute to the fund, raise the retirement age gradually and decrease benefits slightly, but no one is actually going to want to do these. The people retiring don’t want to give up there benefits or work till they’re 80 and the rich don’t want to give more money to something that’s not benefiting them, yet that is. It’s a hard situation and is a hot topic among presidential candidates. I think that we should do a little of everything. Raising the retirement age by a little bit wouldn’t hurt because people live to much longer now, and decreasing one benefit that maybe isn’t crucial won’t kill anyone and having the wealthy pay a tiny bit more hopefully wouldn’t piss them off too much. Anyways, this is an on going problem that needs to be solved, because like Bush said, as much as I hate to agree with him, “Social Security, he said, is ‘the single most successful government program in American history.’”
This topic always keeps me interested, and rather worried. It’s hard to realize that I, as a United States Citizen, have started to pay Social Security taxes and other things that will be going to other people and I won’t receive the same when I get older. I don’t want to think about how the government plans to fix this problem, because most likely, this means more taxing on us Americans, which is exactly what we don’t want. It would seem though, to fix this, we have to add a little more if not a significant amount to the taxing for Social Security funding, and other Entitlement Programs such as this. As said in the article, the retirement age can be raised, which it probably will, and I think this will probably be one of the ways to fix this problem. As the social security program was first set up, the average age of death in the U.S. was not nearly as high as it is today. On average I would say people today are very easily living into their 80’s if not a little further, and this is giving some people 20+ years of retirement funding. I don’t see why the government wouldn’t raise the age requirements. Whatever does happen will probably need to happen fairly soon if this will be fixed in time for the next generation.
Yes, social security may be great for decreasing poverty for the elderly, but what about the rest of the population in poverty? Where is their successful program that pays for them to live-life? Does is really make sense to take money from the poor to finance the poor? To me it doesn’t. Social Security doesn’t make sense. Why are we contributing to this system when it’s just going to dry up by the time we are old enough to benefit from it anyway? There is no way we can reform Social Security, because anyone that touches it dies (well their political campaign does). Like we have talked about it class the grey party has their death grip on social security and won’t let it go. Because they are more politically active than the younger generations, it is hard to convert their belief in social security. Why would they want to cut their own benefits? That seems rather idiotic to me. I think that maybe the legislators could get away with fudging the percentage paid by employers and employees by a half a cent of so, but also in order to balance the ticket a little could bump the age for benefits up a couple of years maybe. Overall I really don’t understand social security. It makes no sense.
We have talked about in class in the past how by the time we will be of need of our Social Security benefits there wont be any. From what it sounds like in the article the author seems pretty confident that the system will be fine as long as there are a few changes. If that means that the pubic might end up spending more money, that’s a sacrifice that needs to be taken. From the sounds of it, it wont be that much of a change anyways. I believe Bush was right in saying that this is the single most successful government program in American history. Like it mentioned in the article poverty is lessening due to the Social Security program and without it who knows how bad poverty would really be.
Making this system mandatory is the only way that it will work. People are reluctant to spend money for things that don’t instantly benefit from. Which is why this needs to be mandatory, they don’t like it now but later they will see it in the future how it was worth it. Like the article stated: “Social Security is a great program precisely because it is mandatory.” I find this statement very true. No one would want to spend money on it, so the few people that did, wouldn’t get much out of it so they would soon stop paying too. But altogether this program does work, and for the future it just needs a few adjustments.
What happens to the other 4 percent of workers that do not pay into social security? Do they just skip out on payment, but still reap the benefits later? That would not seem fair if they were not paying into it. That sounds really good that poverty rates have gone to less than 10% in the last 40 years. I wish we could do that to not just elderly people but to everyone. I am glad that it was made mandatory because it helps many more Americans than it would if it wasn’t. It also raises the question what happens when it’s all dried up like many people say it will be for our generation. I feel that we need to do something about all of this social security. This sounds good to have this If it is all used up by 2017 not many kids in my generation will see any money while they work themselves to the bone. Also I hope that they make sound financial decisions so that we can get the money that we will have earned. When we get old and need the money I totally hope that the money will be there forever and ever.