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Privatize Social Security: Americans are Smart Enough to Invest for Themselves The beginning of the 20 th century was a very hard time for America and its citizens. After the Industrial Revolution and the Great War came the Great Depression. The economy was crashing, and crashing fast; the stock market crashed twice in one week, thousands of people were laid off, and businesses went bankrupt. These were definitely the hardest of times and the people were looking for help. On June 8, 1934, President Franklin D. Roosevelt announces to congress that he intended to provide a program for Social Security.
He created the Committee on Economic Security to study the entire problem of the economy and to provide any recommendations that would help congress make a legislative consideration. In early January 1935, the committee gave the report to Roosevelt and on January 17 he presented it to congress. On August 14, 1935 the Social Security Act was pass into law by President Roosevelt. The act was to help people in need of general welfare and pay retired workers age 65 or older a continuing income after retirement. The program later change to include unemployment insurance, old-age assistance, aid to dependant children, and grants to states for medical care.
In 1939, the program was amended to include payments to the spouse and minor children and survivors benefits pay in the event the worker suffered a premature death. This is pretty much what Americans know as Social Security today and the program has been relatively unchanged since it was stared over sixty years ago (Social Security History). This program was definitely needed during these hard times; no one can really argue that. However, most people today discuss Social Security more than ever: it is argued in congress, it is talked about on the news, and it is debated in political elections. Americans feel that they can do better investing their hard-earned money themselves.
Most Americans feel that Social Security will not be there for them when they reach their retirement age. Social Security is in serious trouble and the United States must act fast before it is too late. One solution that would benefit the American people is to privatize the retirement portion of the Social Security Program. Social Security is in deep water; it is so deep that it could possibly be bankrupt sometime in the next century. Gary Burtless of National Tax Journal stated that The trust funds will begin to decline and, under most plausible forecasts, will fall to zero well before the middle of the next century (399).
This should frighten just about every working person in America. In fact it frightens so many people that it has really become a hot issue in congress, it is debated more often between our congressman and senators, and it is a major concern of President Clinton. This reason for this is simple; Social Security is in trouble and everyone knows it. One of the most shocking groups of people to notice that the Social Security program is in trouble, are senior citizens. James L. Martins 1997 article Personalizing Social Security shows that senior citizens are in favor of privatizing Social Security.
His interviews with senior citizens lead him to believe that most senior citizens do not want Social Security for themselves but for their children and grandchildren. He states... seniors most valuable assets are their children, their grand children, and their great grandchildren (29). So, Martin has decided to start 60 Plus, a senior citizens group trying to find a simple solution to the problem of Social Security. They do this for the sake of their children and their grandchildren (29). However, senior citizens are not the only group who has decided to act on the problem of Social Security.
Martin also discusses that President Clinton and his Social Security Advisory Council is taking measures to find out what to do about the problem with Social Security. The last time a president studied Social Security was back in 1983. Ronald Reagan Social Security Reform Commission stated that Social Security would still be working for the next 75 years. If this is true then why has President Clinton started another commission so soon in the 1990 s? The answer again is simple: there is still a problem. President Clintons council is stating that there is definitely a problem and they agree that it should be privatized (29).
Taxes are what keep Social Security going. Social Security tax will need to be raised significantly in order to keep the current Social Security Program working. Laurence J. Kotloff and Jeffrey Sachs Its High Time to Privatize states that... we need to raise, immediately and permanently, the combined employer-employee OASDI payroll tax rate by 50 percent from 12. 4 percent to 18. 4 percent to avoid having to raise the tax rate by a much larger percentage down the road (16). The book Social Security and Retirement discusses some very interesting points about the tax problems of Social Security.
What happens when the economy is not doing so great and workers are laid off? When people are unemployed it effects the cost of Social Security revenues. For every one million workers who were laid off for a single month in 1980, approximately $ 100 million in anticipated employee and employer taxes to Social Security trust funds were lost (29). Taxes are a serious problem for Social Security and most Americans can not stand it when the government calls for more taxes. If left alone the Social Security program will not be able to go on with out raising taxes significantly. A number of sources indicate that the current tax percentage is 12. 4 percent and in order to keep Social Security going the government will have to raise taxes by approximately 50 percent.
This is something that Americans will not stand for. Social Security in American is unfair. When President Roosevelt first thought of Social Security, America was facing hard times. The whole idea behind the program was to help out the poor, who could not find a job and also help out the retired worker who could not afford to live with out a job.
The idea was a very good one and definitely was need at the time; however, since then times have changed significantly. People are more financially stable, they are investing more, and they are planning for retirement. The poor or financially unstable people are the ones that need this program the most. The problem with Social Security is that it is designed for the financially stable workers as well. According to George J. Church of Time Magazine he states that Social Security is Robin Hood in Reverse.
He feels uncomfortable with the fact that he still receives a Social Security check even though he has made enough money to live comfortably. He might as well be robbing from the poor and delivering to the rich like Robin Hood did, only in reverse. Church also states that the poor pay more into Social Security than the rich... Tax is levied at a rate of 6. 2 % -- on only the first $ 65, 400 of income, so those who earn more pay much less than 6. 2 % of their total earnings.
The working poor pay the full 6. 2 % on every cent of their meager wages (24). This is totally unethical, Social Security is definitely not fair and Americas conscience should have a big problem with this. Kotloff and Sachs state another reason it is unfair, it is because the system redistributes large sums from men to women, from single people to married couples, and from two-earned couples and singles to single-earner couples. Kotloff and Sachs give an example, ...
a 40 -year-old single man earning $ 25, 000 in 1997. For this man, the life time net tax from participating in Social Security measured as of age 65 is $ 397, 000... For him, participating in Social Security is equivalent to arriving at age 65 with $ 397, 000 less in assets fantastic sum for some one earning only $ 25, 000 a year. The corresponding loss for a single women the same age and with the same earnings is $ 14, 000 less because, on average, womens greater life expectancy allows them to collect benefits longer than do men (16). This is just one example of many reasons why the current Social Security Program is unfair. The People must be made aware of this unfairness.
Most people are not aware of how Social Security works and how the trust fund is distributed among the people. If people were aware of this unfairness they would definitely seek a change in the Social Security system. What can we do about the current Social Security program? Obviously there are problems with it. Should America abolish the program all together? No way, that would leave a lot of people homeless, poor, in need of medical care, etc.
What America needs is an option to Social Security? Surveys have show that most people believe that there is a problem with Social Security and most agree the only why to fix it is to give people the option to privatize the retirement portion of Social Security. Privatizing Social Security works and there are countries already moving in this direction. These countries include most of Europe and South America.
Chile was the first to suggest this and most financial gurus laughed them at. Now Chiles retirees are one of the most financially stable in the world. One of the reasons why it would be better to privatize Social Security is because the current programs rate of return makes the program an increasingly worse investment for todays young work...
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Research essay sample on Social Security Program Privatizing Social Security
