Burlington High School
Burlington, Kansas
Teacher: Mrs. Devra Parker
Social Security: Time for a Change
By: Emily Sunseri
12th Grade
Why does President Bush want to reform social security? What other retirement options are there going to be for today’s youth? To whom would Bush’s plan for future social security be advantageous? There are so many questions one could ask when it comes to Bush’s plans for social security and, ironically, there isn’t a source that really knows answers. I have found the future of the social security program to be of great danger to the country’s economy. The worrisome part of the program seems to be there is no quick, clean fix. Overall, I think that anyone trying to fix any part of social security finds the same idea that John Thune described when he depicted social security as an extremely complicated program. According to some, Bush’s proposal could help prevent the next great depression. For others, it could encourage the next great depression; but, the fact of the matter is, no one will really know until some sort of action takes place.
Social security was implemented in the 1930s during the Great Depression. Problem one came along when people began to think of social security as their sole source of income after they retired. The fact of the matter is this: social security was never supposed to be the sole source of income after retirement. Problem two showed up when, as time moved on, people began to want more and more money from the government and the government ended up giving them more and more. America, being a nation that thrives on credit, eventually led itself out of the Great Depression and began to buy and borrow again and, as a result, America began to accumulate a huge debt. There are certain years that more people pay into the Trust Fund than are being paid by the fund. As previously stated, America thrives on credit; so, it begins borrowing money from the fund and then never puts money back, which ends up being problem three. In three years the Baby Boomers will began to retire which makes problem four. The fact of the matter is, if one wants the option of a retirement plan, he’d better start acting fast because the fund is expected to be bankrupt by 2041.
President Bush has proposed the idea that social security take on a private role in people’s lives. The current program would be traded for a federally-run retirement investment plan. Bush is basically proposing that younger workers should be allowed to put part of their payroll taxes into personal retirement accounts. Under this system, personal accounts would be absolutely voluntary, and the money would go into a combination of stocks and bonds which would hold the potential of earning a higher return rate. The money that would accumulate over the years would provide enough money for the worker to retire or pass on to his or her children.
On one side of the scale, conservatives favor privatization. This party believes that when it comes to their retirement investments, it is the individual’s right or personal choice. They claim that the current system lacks individualization. This group feels that it is important for people to have some control over their retirement income, and they also view the social security problem as a crisis that should be given immediate attention. They feel that, overall, the whole system needs to be reformed.
Most moderates from the left and the right support Bush’s reform. The support is based on the fact that the reform would increase the value of the Trust Fund and still provide benefits to all citizens. Both groups believe that the government should continue to maintain a certain control on the overall system, but also agree that certain aspects of retirement investments should be privatized. The moderate conservatives wish to increase IRAs or remove the Earning’s Test. The moderate liberals believe the government should not look to the stock market but find a way to revise the current system to include some form of privatization.
Many liberals argue that reforming the system to involve the stock market is too risky. This party believes there should be an alternative to Bush’s plan to fix social security. The liberal side holds the position that social security is not an emergency, and that minor alterations to the present system will be enough. They favor tax increases and cuts to help wealthier retirees keep the current system continuing.
I think that as an individual, I would have to agree with Bush’s reform. I feel that the current system has made too many errors in the past and really can’t save itself. Something is going to have to be done soon if there is any hope for a government retirement program. I mentioned four problems when just simply describing the program. I firmly believe that the system was founded to be fun money as opposed to living expense money. Just as I believe the government was wrong to raise the amount an individual could earn through the program. People need to become less dependent on the government because the fact of the matter is a system that is seven trillion dollars in debt is eventually going to be held accountable for that amount. I think that it is ridiculous that people do not invest in some other way for retirement. Bush’s system allows people to choose what they want to do with their retirement money, and, furthermore, I think that over the long haul, Bush’s reform would be a more beneficial system.
There is no way to tell what Bush’s proposal would really do for America, but something must be done if there is any hope of some sort of government protected retirement program. People on both sides seem to agree that something must be done, and the argument lies where one examines what should be done. Should we take a risk? Should social security be privatized? Only time will give us the answers to these and other questions concerning social security.
Answers To Questions Prompted By The Required Reading
Q1- Explain why some people:
a) claim that there are no social security trust funds: Basically people claim that the social security trust fund is just a giant tax collection tool. It is a way for the government to bring in a little more money than would normally be at its disposal. They do this by selling bonds; also whatever money is left over in the social security trust fund each year is taken and spent on different areas. social security is, however, considered independent of the general Federal Budget Fund. At this point in time, there is more money coming into social security than is being paid out, and whatever money is left over, is being spent as if it were part of the general budget fund.
b) claim that politicians have spent the trust fund money to run the government: All three of these questions have basically the same general point: the government has no problem with borrowing money. The problem is, when the government borrows money, it is never in a hurry to give it back and that’s basically what has happened to our social security fund. Congress keeps taking money out and is not replacing it. When Congress takes the money, they use it for whatever they think they need it for whether it is defense or hurricane relief. Some people feel that the politicians are spending the trust money because they are borrowing it to use for other purposes and they never end up replacing it.
c) claim that the trust fund money is invested: People claim that the trust fund money is invested because America is a nation that thrives on credit. If the government does not have enough to buy something, the government borrows money from somewhere else. The past few years, there has been more money being paid into social security than is being paid out. Instead of leaving the fund alone and allowing it to gain the interest it needs to sustain itself during the baby boomer’s retirement years, the government is taking the money out of the trust fund and spending it as if it were part of the budget fund. People believe that the money is invested, because, if it isn’t used for social security, then it is going to be spent on something else.
Which of the above do you agree with and why?
I agree that the trust fund money is invested. Our government survives on credit. Everything it does takes money, and the money they use is normally money that they borrowed from somewhere else. Therefore, any money that the government gains, is generally already invested in something. Look at our national debt--$7.9 trillion. Until we pay that off, technically, any money that the government has is already owed to someone somewhere. And even though the social security trust fund is independent of the general budget, on the years that social security receipts exceed the amount that the fund has to pay out, the government borrows money from the fund and then never replaces the money. This is one of the reasons we are running into problems now. If all the money that people had invested into social security was in the account, then there would be enough money to take care of everyone.
Q2- When U.S. Treasury Bonds are sold where does the money go and what is it used for?
The United States’ Constitution gives Congress the right to borrow money and Congress does this mostly through the sale of bonds to the American public. Basically, when one buys a bond, they are loaning the government money in hopes of receiving the original amount plus a little interest back once the document has matured. Bonds from the social security trust fund are sold in any year that the social security tax receipts exceed the amount of benefit payments. Once Congress has the money, they can really do whatever seems fit with it. Thus the reason that the national debt is what it is.
Q3- Why do you think that social security is the only source of retirement income for 22% of those over age 65? How would you change that? Please comment if you know an elderly person who is totally dependent on a monthly social security check.
The
original intention of social security was only to give people a little extra
spending money or fun money. That being said, social security was never supposed
to be enough to live on alone. People are supposed to be doing their own
personal form of retirement savings, and since a whole lot of people do not
save, social security becomes the sole income. I am not sure that there is a way
to change this problem. It is one of those issues where people are going to have
to decide on their own to jump on the band wagon and start saving on their own.
However, I do not think that giving people more and more money every so many
years is helping the situation. Most people will not change until they are
forced to, and, if they have enough to be content, then they will never change.
Q4- What is the average life expectancy of an American over age 65 today?
The
average life expectancy of an American over the age of 65 is currently set at 83
years of age.
Q5- What is the average social security benefit in your state? Is it more or less than the average benefit of the state with the largest population in the United States?
The
average social security benefit in
Kansas
is near $944 a month for a retired worker.
California
is the largest state in the
United States population
wise and each retired worker in
California
receives $926. That being said, Kansans receive more than the average benefit of
Californians.
Q6- In 2003, what was the amount of Social Security income derived from interest earnings? How much from payroll taxes?
In 2003, the amount of social security that was derived from payroll taxes was close to $547 billion. The amount of interest that was accumulated was $85 billion.
Q7- Who can get full retirement benefits even though they continue to earn income after attaining full retirement age and who cannot? In 2004 what was considered “full retirement age”?
The
full retirement age is the age at which one can receive all of his or her social
security benefits. As a result of people living longer, the full retirement age
is on the rise. In 2004, the full retirement age was 67 years. Anybody that has
reached full retirement age can collect benefits along with an income with no
limit on it. If one is under the full retirement age and starts collecting
benefits early, there is a certain limit on the amount of income that one can
bring in.
Q8- Give two examples of “special payments”.
Special payments are the income one receives for the work he or she completes before he or she gets his or her social security benefits. Two instances where special payments are distributed would be bonuses and accumulated vacation or sick pay.
Q9- What benefits does social security provide to people who have not yet reached retirement age?
Social
security provides the benefit of forcing people who have not yet retired to
invest in their future. This way, if they never invest any money and never save
for anything like they are supposed to do, they will at least have a little
money to fall back on.
Q10- How long does it take a worker under age 24 to be qualified to receive social security benefits?
It
takes people that were born after 1929 ten years of work before they can retire
with benefits; so, if one is under the age of 77, he or she needs ten years.
Q11- Do you think the social security system needs to be reformed now?
Support
your answer with facts. I think people need to realize that the fund was set up
to be fun money and not enough to live on. By giving people more and more money,
we are not using the system correctly. I think that people should start once
again saving for their retirement like they are supposed to do and stop trying
to mess with the system. The
United States
should not have to support people that are perfectly capable of working, earning
money and saving money. If we keep giving people money, then we are turning into
a haven for poor old people and eventually the government is not going to be
able to support all the people let alone itself and the country as a whole.
Q12- Suppose you are a young working person. If you could opt out of the Social Security system and invest the portion of your pay that would otherwise be invested for you, would you choose to do so? Why or why not?
Hypothetically speaking, if I were a young working person and could opt out of the social security system, I would. There are so many other safe ways people can invest these days and, in some cases, earn a little interest on the side. Once I had taken the option to opt out, I would then find a very good accountant and invest at least a quarter of it in the Stock Market, because the Stock Market is really just as stable as the social security system will be when I retire.
www.ssa.gov/qa.htm--3-- informative
www.grandtimes.com/ss.html--3--slightly pro reform
www.heritage.org/research/SocialSecurity/BG1256.cfm--4--slightly anti reform
www.cato.org/testimony.ct-moore.html--3--pro reform
www.federalbudget.com/--1--pro reform
www.whitehouse.gov/infocus/social-security/--1--pro reform
www.catallarchy.net/blog/archives/2005/01/-- informative
agnews.tamu.edu/dailynews/stories/CFAM/Apr2605a.htm—1—pro reform
www.freemarketproject.org/specialreports/2005/socialsecurity/socsec.asp--2--anti reform
www.issues2000.org/background_social_security.htm--very informative