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Example research essay topic: The Decline Of Social Security - 2,057 words

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The Decline of Social Security Introduction Social Security is a contributory social insurance providing benefits to millions of Americans. Every state bears responsibility for its citizens. Social security is the way to help people who need state support. In every country there is more or less developed social security system, and it is states duty to make a social security efficient. Although the history of social security goes back to those times when the first Britain came to the New World and brought with then their Poor Laws, the history of modern social security in The United States of America began on August 14, 1935, when President Roosevelt signed Social Security Act.

Now almost 70 years later, there seem to be a sort of decline in modern social security system of the US. Talking about improving of Social Security, President Clinton once said We have a chance to fix the roof while the sun is still shining. But it was during Bush's presidency when in 2001 the President's Commission to Strengthen Social Security proposed to make changes in social security system. And now it is evident that President Bush is going to carry out the Social Security Reform. In this work we will analyze the present situation, the problems of the existing Social Security Program, look into political and public opinion about the proposed reform. How is Social Security System Financed?

About 96 % of workers in the United States contribute to Social Security, paying a flat tax of 6, 2 % of their wage income up to $ 90, 000 in 2005; their employers contribute an equal amount. Self-employed people pay both shares: one as employers and the other as employees. Another way to finance Social Security System, although it gains not so great amounts of money, is taxation from high-income beneficiaries, whose combined income is $ 25, 000 -$ 34, 000. They have to pay taxes on 50 % of their benefits.

The same is with jointly registered married couples, whose combined income makes up $ 32, 000 -$ 44, 000. Pros and Cons of Social Security Reform The social Security Program influences different groups of states population, e. g. the young and the adult, men and women. The Social Security Reform has raised heated debates in the society. The society has divided in two groups: one group supports reform and the other is strongly against it.

We will investigate both opinions. The existing Social Security Program represents a pay-as-you-go system. It is made so that each generation of workers pays the benefits of current retirees. Today more than 96 percent of workers pay Social Security taxes, more than 47 million Americans receive checks from the Social Security system, almost two-thirds of retired Americans get more than half of their incomes from Social Security and for one in six, it is their only income. The system of todays workers paying benefits of todays retirees is quite efficient. But it faces problems when there occur demographic changes and population becomes older (the number of retired people exceeds the number of working ones).

This is the problem, which US Social Security System is facing now. The period from 1946 to 1964 was marked by so-called baby-boom wave. The generation of that period is eligible to retire starting from about 2008. And as the current part of working population is smaller than the one that is going to retire, the taxes paid to the Social Security System will not make up for the benefits to retirees.

The difference between the number of old and young population continues to grow. Life expectancy is increasing (in 1940, a 65 -year-old man could expect to live another 12 years, today it's 15 years, and by 2040 it will be 17 years) and the birth rate falling from 3. 6 children for a typical woman of child-bearing age in 1960 to just two today and a projected 1. 9 by 2020 and is already less than the rate of 2. 1 needed just to replace the existing population. In the field of social security it will lead to the situation when Social Security Trust Funds are exhausted. According to one sources it can happen in 2032, according to the other in 2042. But anyway it is going to happen. To change the situation the reform was proposed.

Currently the size of workers benefits depends on their earnings throughout the career. According to the new reform the amount of benefits will depend on the performance of investments on workers personal account. The reform also comprises the proposal to raise the maximum limit on the tax paid to Social Security, which is currently set at 12, 4 % up to a maximum of $ 90, 000. The great amount of Americans who earn less than $ 90, 000 will, certainly, gain from the increasing of the maximum limit. Those who stand for the reform believe that this is the way out of the current situation. But there is the whole range of objections of those who dont support President Bush's intention to reform the existing Social Security System: There even exist an opinion that there is no need in a reform at all, as there is no crisis in the Social Security System, only permanent financial problem and the only reasonable thing to do is just to wait.

The refusal from the tax cuts will help to solve the problem. Supporters of the reform claim on this that it is not the way out of problem to increase constantly the taxes. In such a way only the solvency could be guaranteed, but their would remain a dependence which would result in constant tax rising or benefits cuts, whenever some financial problem occurs... The new system proposes both solvency and enough savings.

The strongest argument against the reform is that new Social Security system will not be efficient and will only worsen the situation. The existing now Social Security takes into consideration the rise of living standards. After retirement workers benefits are adjusted to the past wage growth. New system takes into consideration only the inflation of prices (the so-called price indexing practice) and pays no attention to the changes of wages. So in spite of workers contributing to the improvement of living standards they themselves wont be able to enjoy the results of their work. It was counted that under the new Social Security System, a person who would retire by 2042 would get benefits 26 % lower than under the current system and a person retiring in 2075 would get benefits 46 % lower comparing to the existing law.

So in spite of the fact that is constantly emphasized that the young adults will be one of those who will mostly gain from the new Social Security System, it appears that it is not true. According to the Congressional Budget Office, to raise the rate of return for future generations by moving to a funded system, some generations must receive rates of return even lower than they would have gotten under the pay-as-you-go system. Influence of Social Security Reform on Women There is no general opinion on whether women will gain or lose from the new Social Security System. Social Security is very important for women and, any changes leading to unfavorable results will greatly influence them. Those who back up reform believe that women will gain from it.

And again those who oppose changes think that women can seriously suffer from it both directly and indirectly. The thing is that it is mostly women and not men who care for aging parents, that is why if the reform fails, it will add only new obligations to women. This is an indirect influence of the reform on women. The guaranteed income from social benefits helps most women to avoid poverty. On the whole, women can gain less from retirement security than men due to several reasons: womens earnings are usually lower than mens, women are more responsible for children and it causes frequent breaks in their work. At the same time, current Social Security System gives women quite sufficient benefits, as their life expectancy is higher than mens and the progressive structure of social security transfers retirement income to those who earn less.

The current Social Security System comprises benefits for workers family (wife and children) in case of his retirement, disability or death. In the last two cases, women depending on husbands income wont suffer hardships. Those who oppose the new system say, that there is nothing about this case in a new program. Those who stand for it argue that a personal account could be passed to any other person. New privatized accounts would be entirely tied to personal savings. Due to the proposed reform, when a woman made a break in her work to take care about her child she couldnt put money to her privatized account.

Another reason why new system can be riskier for women than men is that there is a tendency among women to live longer than men. While current Social Security System provides with benefits till death, the new one would pay benefits till there are savings on privatized account. Political Opinion on Social Security Reform As it is always happens, the debates raised over any social and economic issue raised debates among opposing political forces. The Social Security Reform has divided political forces in two camps. One camp standing for the reform includes Republicans and Conservatives, who believe that there is an urge need in the reform and predict that if it isnt carried out the Social Security System will face crisis, another camp, consisting of Democrats, strongly opposes it.

Republicans and Conservatives believe that in case no reform is done, raising of taxes, borrowing money, cutting benefits or increasing the retirement age could permanently save Social Security System. To avoid these measures it is better to rebuild the whole system, as getting rid of symptoms never cures the illness. Although Democrats dont propose their own plan, they are against the reform, claiming that government will need trillions of dollars to invest the program. The opponents of Democrats claim that there are two reasons why they oppose the Social Security reform: firstly, they used to oppose everything republicans proposed, not depending on if it is right or wrong, secondary, because during the period they kept power in their hands they took some funds from the Social Security Program to cover the states debts.

But if to summer up all said above it is evident that Democrats may have objective reasons to oppose the reform, as it is not so ideal as some people believes. Conclusion The Social Security System has been facing a decline for several decades. It is evident that it needs to be reformed, as the increasing of taxation, decreasing of social benefits and other measures of this kind are not sufficient and cant be solution to the problem. When carrying out the reform the interests of all people must be taken into consideration. The reform should be also sufficient, that is, it must become a real solution to the problem and not lead to the cuts in benefits in future years. There is another worrying aspect to be taken into consideration the fact that the number of elderly people exceeds the number of the young.

Such demographic changes show the aging of nation. It can be a permanent occurrence, but can last long. So, it must be paid attention too. Moreover, the improvement of the demographic situation will help to solve the Social Security problem without any reform, as if the number of working people exceeds the number of retirees than there will be no problem at all. Bibliography Back to the Future: The Harsh Reality Underlying a Proposed Change in Social Security. The Century Foundation Press.

New York City, 2005 Baker Dean, Weistbort Mark. Social Security: The Phony Crisis. University Of Chicago Press; 1 st, 2001 Diamond A. Peter Social Security Reform (The Lindahl Lectures).

Oxford University Press, 2003 Ghilarducci Terse, Van Door nOons, Palmer L. John, Hill Catherine. In Search of Retirement Security: The Changing Mix of Social Insurance, Employee Benefits, and Individual Responsibility. Oxford University Press, 2002 Social Security Problems Accelerating web The Basics: Social Security Reform (Revised for 2005). The Century Foundation Press. New York City, 2005


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Research essay sample on The Decline Of Social Security

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