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Social Security Essay, Research Paper

Social Security

Social Security has long been a subject of het argument for the people of the United States from little, low income households to the most educated Harvard alumnuss. Although all Social Security plans serve for merely one simple intent to supply people income and benefit after their retirements, different people all have different positions and thoughts on how this end should be achieved. The new elected president Bush besides carries out his ain program of leting partial or entire denationalization of SS. Is it a good solution for the jobs staying in our present SS system? What is the chief job of the Social Security system? And how does Bush & # 8217 ; s proposal affect our fiscal hereafter? Those inquiries are traveling to be answered in my paper. But first of all, allow & # 8217 ; s take a expression at the history and statute law alteration of the Social Security plan.

Because of the monolithic unemployment and poorness caused by the Great Depression, the authorities realized that it had to make something to protect employees from unemployment, unwellness, and old age. The first measure taken was the Social Security Act of 1935, Employees used to action their employers to have compensation after a work-related hurt or unwellness. Besides, the new act created a societal insurance plan designed to pay worker a pension after retirement. Harmonizing to the official Social Security web site www.socialsecurity.gov, the first SSN was issued in November 1936, and over 35 million SSN cards were issued in the undermentioned two old ages. In 1939, a new amendment was established to add two new classs of benefits harmonizing to the same web site: payments non merely to the workers but besides to the partner and kids of a retired worker and subsister benefits paid to the household in the event of the premature decease of the worker.

During the 40 & # 8217 ; s, there is virtually no alteration in the Social Security plan. But in 1950, major amendments were enacted. These amendments raised benefits for the first clip. These additions, known as Cost-of-Living Adjustments ( CoLAs ) . I think this is the most of import statute law alteration in SS history. Because under these amendments, people & # 8217 ; s retire benefits began increase with regard to clip, leting retired workers overcome the troubles caused by rising prices. On August 1, 1956, another Social Security act was amended to supply benefits to handicapped workers aged 50-65 and disable grownup kids. Over the following two old ages, Congress broadened this plan, besides supplying this benefit to handicapped workers under age 50 and their dependants. I think the SS Amendments of 1956 was the first large measure to cover with disablements. During the 60 & # 8217 ; s, the most important alteration was the Medicare. Under Medicare, wellness converges was extended to Social Security donees aged 65 or older. About 20 million donees enrolled in Medicare in the first 3 old ages of the plan. Again harmonizing to the same web site. At the last, there are two major statute law alterations in the 90 & # 8217 ; s. One is the 1994 statute law, & # 8220 ; the periodic Social Security Advisory Councils were abolished and a lasting seven-member bipartizan Social Security Advisory Board was formed to supply independent advice and advocate on Social Security. & # 8221 ; The other one is & # 8221 ; Welfare reform statute law, signed by President Clinton in 1996, terminated SSI eligibility for most non-c

itizens. ”

( www.socialsecurity.gov )

Although the Social Security plan has achieved a batch for supplying benefits for the retired workers and less-income households, there are still some jobs remain in the system. One of the most major jobs is that the money that the taxpayers earn on their compulsory Social Security parts is a batch less than they could gain in a private pension, a funded system or even the unstable stock market. Harvard economic expert Martin Feldstein argues that & # 8220 ; Social Security parts can be expected to turn at the same low rate at which the paysheet revenue enhancement base has been turning: 2.6 % , on norm since 1960. The existent pretax return on non-financial corporate capital was 9.3 % over the same period. & # 8221 ; This information granted the 6.7 % difference, shows the loss is rather important. Because of this consequence, deformations in labour supply will happen. Peoples will necessitate to work longer hours than if a funded system were used to be able to afford the same sum of retirement income. Feldstein estimates that this loss from Social Security revenue enhancements in 1995 was about $ 68 billion. That & # 8217 ; s about 1 % of the GDP compared with the informations from our text edition. The harm it dose to national economy and investing is terrible. If we would exchange to a funded or privatized system, it would spread out the state & # 8217 ; s stock significantly that the GDP would easy skid past $ 10 trillion, which is, harmonizing to Feldstein, equal to 2 % of GDP per twelvemonth.

I think the best solution to this job should mention to the Bush & # 8217 ; s plan on the Social Security reform. From the last paragraph, we know that the chief job for the Social Security system is its low return rate and this is due to the inefficient authorities direction of our revenue enhancement money. So new president Bush has proposed leting works the opportunity at least to deviate a potion of their Social Security paysheet revenue enhancements into conservative private investings, leting their money the to turn at a much faster rate. This will besides minimise rough feelings toward the Social Security system and will give people more incentive to collaborate and see their ain personal benefits, every bit good as the benefit of the authorities ( less revenue enhancement losingss ) and economic system. The end product addition in the economic system would be important in itself. State a individual invest $ 10,000 of his paysheet revenue enhancements on the stock market which has a mean existent rate of return of 7.56 % since 1926 ( harmonizing to www.socialsecurty.org/faqs.html ) , and by the terminal of the 30 old ages, he will acquire $ 89,027 return compares to merely $ 18,113 from the authorities operated societal security plan which has a existent rate of return of merely 2 % . That & # 8217 ; s about five times difference. Therefore I believe Bush & # 8217 ; s proposal should be the best solution to this job.

In decision, the United States Social Security plan started back in 1935 has experienced 66 old ages of developing and reforming. During the last 66 old ages, this plan has achieved a batch for supplying benefits to retired workers and their dependants. The statute law besides has successfully improved the Medicare, disablement intervention and the Cost-of-living Adjustments. Although the low rate of bend is a considerable job of the Social Security system, I believe as Bush has predict, his reform of leting private investings of paysheet revenue enhancements would finally forestall our Social Security from bankrupted and convey people a higher criterion of life.

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