The Privatization of Social Security: Difference between revisions
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Revision as of 00:24, 30 November 2006
Social Security
What is Social Security?
- In the United States, social security refers to the program for qualified people called the Federal, Old Aged, Survivors, and Disability Insurance(OASDI). This program is funded by money from the Federal Insurance Contributions Act, which is a taxt taken from paychecks, and put into the National Treasury. Additionally, the Treasury issues T-Bills to the Social Security administration in order to cover all payments that must be made. To receive partial benefits a person must have worked for at least 10 years and be age 62 or older. Full retirment benefits can not be received until a person is 66. The benefits received are then based on the amount of income earned in their last year of working.
The History of Social Security
- The Social Security Act of 1935 was the precursor to the program now in place in the United States. At the time, the program paid benefits only to the retired worker. Many types of workers were excluded from these benefits including farmers, the self-employed, and some small businesses. The payments to the benefactors were funded by a variation of payroll tax now in place. As the system progressed through the years, more and more people began to gain eligibility through new laws enacted(see timeline). As the United States reached the twenty-first century, policy makers began to notice the impending problem that the baby-boomer generation would cause as they grew older. Finally, the stability of social security was questioned.
Timeline of Social Security
The Future of Social Security
- Because of the rising amount of baby boomers, there is expected to be a rapid depletion of the Social Security fund that was set up in order to finance the program. Figure 1 shows the expected increase in percentage of GDP for social security. Also, from the figure, it is believed that revenue will meet costs until 2016. By the time, the baby boomers are causing this explosion the amount of workers per beneficiaries will go down greatly as seen in figure 2. The number of workers per beneficiary will be reduced by fifty percent, greatly reducing the amount of payroll taxes collected as revenue. This is leading many policy makers to search for alternatives to a "pay-as-you-go" pension system.
Figure 1 - http://www.socialsecurity.gov/OACT/TR/TR06/II_project.html#wp106217 http://www.socialsecurity.gov/OACT/TR/TR06/images/II_project_IID5.gif
Figure 2 - http://www.socialsecurity.gov/OACT/TR/TR06/II_project.html#wp106217 http://www.socialsecurity.gov/OACT/TR/TR06/images/II_project_IID3.gif
