1996-1997 Essay Contest: Social Security Clarifications

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We found so many misconceptions in last year's student papers that the Foundation wondered if perhaps it was doing more harm than good by having students explore an issue as complicated as Social Security.

"The system seems so simple, why should it have problems that are so complicated to understand? David Wessel quotes Henry Aaron, a Brookings Institution economist, 'Misinformation and confusion are rampant. A lot of politicians are quite confused about Social Security, too. In that sense they represent their constituency and influence it, too. Someone needs to come out and explain exactly what's going on in the Social Security system.'"
Jessica Bohn, Luck High School, Luck, Wisconsin

As Hank Aaron points out in Jessica's excerpt above, a good many people are confused about this issue and few have the time or determination required to become adequately informed. Unfortunately rhetoric and political decisions are often based on misconceptions. Decisions affecting the social security system will have the greatest impact on young people. If they do not wrestle with this issue, who will? We are asking you--young, old or in between--to help by clearing up some of these misconceptions.

We will recognize those who can best clear up the misconceptions which abound in the writing of students reproduced below as anonymous excerpts. Download, read, research and submit your clarifications in 250 to 750 words. Comment on one or more of the fourteen paragraphs.

Misconceptions

  1. "By putting higher taxes on the wealthy,the government is saving money."
  2. "There are many retirees whose Social Security check goes unnoticed because of their early investments in preparation for retirement. In fact, the majority of citizens over fifty-five have an income twice that of Americans under thirty-five. Yet they still must receive a payment due to all their years of participation in the program."
  3. "There are five general difficulties with Social Security today; the program is expected to run out of money, people are living longer today than in past years, people take advantage of the program, people are not paying income tax on Social Security, and the cost-of-living benefits are increasing."
  4. "The most compelling solution for reform would be to add a payroll tax because it would help increase money flow throughout the nation and quite possibly stabilize the Social Security fund. The need for further tax increases or cuts in benefits for the future would be eliminated. There are not enough tax payers to fully support Social Security, therefore if we place a tax on payrolls more money and more benefits would be issued."
  5. "The Consumer Price Index (CPI and the cost of Living Adjustment (COLA) aren't updated. I think that if the CPI and the COLA were justly updated every two years, then those who needed Social Security the most would get what they deserved, while the less needy would not get so much."
  6. "Most people do not pay taxes on their Social Security."
  7. "When the benefits were first made in the thirties, they were developed for that time period. Now, sixty years later the benefits need to be modified. Back in the thirties people were given more money because there were less people that received the funding. Now more people are poor and living longer which is making the plan run out of money fast. Benefits might need to start becoming more difficult to receive. More people means less jobs and less jobs means more poverty."
  8. "Social Security is a major drain on the economic system."
  9. "It has less value today than when it was first proposed. The benefits are small."
  10. "It seems that the cost of living is constantly increasing, but Social Security rates stay constant. The rates one receives do not increase proportionally with the increase in the cost of living."
  11. "One reform idea is to make everyone put away money in a special account. When a person reaches the ages of twenty-one, seven percent should be taken from his/her paycheck and put into a special bank account in his/her name. That way, each person can save for his/her own retirement while drawing interest on the money paid in the bank. This money would be tax deferred, permitting it to build to a substantial sum. When they reach retirement age, the money may be withdrawn. This is the money they will spend during their retirement years. It is now taxable income, and the government will be entitled to withhold income taxes, Social Security Tax, and other related taxes. The government will increase its income substantially. Two advantages of this reform are that each person is being treated equally, no one individual receiving special treatment, and the government is saving money. One disadvantage is that people are giving up seven percent of their spendable income. Another disadvantage is the inability for people to manage their money. The money put into the account will not be personally managed, but managed by the government or some other form of investment adviser."
  12. "Our own government taking the Social security funds and replacing them with IOUs is another reason why the system must be changed. In all likelihood, those IOUs will never be paid back."
  13. "Another way to try and solve the Social Security mess would be to prevent the government from borrowing money form the collected funds. If this had been enforced, there wouldn't be any problem with collecting on IOU's. Also, with nowhere to turn for money, the government might realize how sad of a shape it is in. Then Americans might actually see some changes take place for the better--probably not, though. With no money, how would our country function? Our government officials would have to find new ways to acquire funds, which would probably mean more corruption than there already is in Washington. So maybe that is not so good of an idea after all."
  14. "Now is the time for someone to start on a solution to the dilemma; but what course(s) of action should we take? One solution is to demand that government agencies who've borrowed from the excess Social Security funds make it a top priority to pay it back. By doing so, we'll force the government to take responsibility for its actions and we might finally have a real balance. Realistically, it'd take too long to pay everything back, and it's likely that instead of cutting spending, taxes will be hiked to make up the deficit."

If you can detect the incorrect assumptions behind the various concepts, please submit your clarifications to us by email.

Essays and questionnaire, must be submitted to the Harry Singer Foundation on or before April 18, 1997. Upon submittal, entries become the property of The Harry Singer Foundation.

Awards and notification of winning essays will be issued on or before May 19, 1997.

If you are a teacher and would like to have your students work on this project, contact us for special class awards information. Papers for the entire class may be sent together as an attached file or in several email communications or by regular mail to:

Social Security Clarifications
The Harry Singer Foundation
P.O. Box 223159, Carmel, California 93922.                                                                       Back