Privatize Social Security: Americans are Smart Enough to Invest for Themselves The beginning of the 20th 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).
The Research paper on Social Programs
Research Paper As adolescents, we tend to thrive off of experiences in our lives and we base our personality and future upon them. Some of those experiences can be good but some can be malicious. Unfortunately there are some kids that are present in social programs who do not feel this opportunity to make mistakes or correct them. Which is why adolescents who are enrolled in social programs tend ...
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 American?s 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. Martin?s 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).
The Term Paper on Canadas Unemployment Rate Canada Social Taxes
Canada's Unemployment Rate For decades prior to the 1981-82 recession, the national unemployment rates of Canada and the United States had been nearly identical. Since then, a persistent 'unemployment rate gap' has emerged. Throughout most of the 1980 s, Canada's unemployment rate has consistently been about 2 percentage points higher than in the United States. The gap developed in spite of very ...
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 Clinton?s 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. Kotlokoff and Jeffrey Sachs ?It?s 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).
The Essay on Social Security 4
... in coming years than the 1.7 percent projected by the program's trustees, Social Security becomes "a crisis that doesn't exist, " according to ... 1, 2000, (November 8, 2000). Bulling, David, Jr., "Social Security: A Problem?" Business Week, May 29, 2000, pp.19-31. Erickson, Dinah ... Franklin D. Roosevelt opted to tax active workers and use that money to pay benefits to people who were already at ...
This is totally unethical, Social Security is definitely not fair and America?s 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?a 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, women?s 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 Chile?s 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 program?s rate of return makes the program an increasingly worse investment for today?s young worker.
The Essay on Theres More To Compensating Good People Than Money
The very word conjures up images of money-a bountiful sum in cash or checks, a generous amount, richly deserved, paid in return for good works of some kind. But in today's economic and employment environment, giving someone a cash reward for work beyond the call of duty-a raise or a bonus-often has less impact than the employer intended. It simply isn't as surefire an "employee retention tool" is ...
More and more people in the United States are starting to invest their money in the stock market, mutual funds, savings accounts, bonds, etc. They feel that they are smart enough to take care of their own investments and do not need the government to take care of them like children. They also do not feel comfortable with living on Social Security when it comes time to retire. James K. Glassman from US News & World Report writes about how the governments help is not need for people whom now how to invest their money for retirement. Currently Social Security returns an average of 1 to 2 percent, so this is why people feel they can do better investing themselves and do. He feels that the problem with the system is that it has always forced American workers in to anteing their hard-earned money so that we could someday get back what we pay in. However, today it is a lot less money than what people pay in (29).
The Essay on Income Security for Women
The Employment Insurance (EI) is a leading insurance program that revamped the Unemployment Insurance (UI) program introduced in 1940. The EI reduces dependency on the state for income support. After being introduced in 1996, minor changes were done to the EI frequently. Earlier under UI, women’s jobs and unemployment risks were not covered or less covered. The EI focused mainly on women’s ...
Glassman illustrates ?The Cato Institute calculates that a low-wage ($12,600 a year) worker born in 1950 will receive $631 a month in current dollars from Social Security at retirement. But if the retirement portion of payroll taxes went instead into stock, the worker would have an annuity yielding $2,490 a month? (50).
If most people knew this they most likely would not want to count on the government to invest their hard-earned money for only $631 a month. Glassman also points out the risks involved with the stock market. Because some people are not well educated in the stock market or because it can be a bit confusing to understand, people tend to be a little reluctant to invest their money. But investing long-term in the stock market is almost no risk at all. According to Glassman, ?Since 1926, according to Ibbotson Associates of Chicago, stock returns have been negative in 20 out of 71 years? (50).
Glassman also raises a good question on whether Americans, given the opportunity to put down a percentage of their salaries into private pension plans instead, can they invest wisely? He states that ?The Chileans do; the British Do . . . Americans are prudent enough and smart enough to handle their own investments. At any rate, even if they goof badly, they?ll still likely do better than Social Security? (50).
Some might argue that women should be concerned about privatizing Social Security. The reason for this is because most working women in the world are still a minority and this means that they will be paid less than the working man will. This is a fact, however upsetting this is or however unfair it is; it is none the less true. John Williamson in his articles ?Should Women Support the Privatization of Social Security?? he discusses whether or not women should support the privatizing of Social Security. He suggests that women should be concerned. The only women that most likely would not have concern are those that have high paying jobs. But in most case women do not have high paying jobs and therefore will have to rely on Social Security when they reach retirement. He feels since privatizing Social Security involves investing money primarily into the stock market; low paid women can not afford to take the risk. Williamson suggests middle-and low-income women are much more dependent on Social Security because they are less healthy and can not work like upper class women. He states that ?More affluent women can more easily delay retirement a few years if need be in response to a dramatic drop in stock or bond markets. They tend to be in better health and have jobs that are physically less demanding than those held by others? (97).
The Essay on Social Security System
The social security system in the United States is a federal program that benefits the retirees and the disabled that was introduced in 1935. This program contains the disability income, public housing, retirement benefits, food stamps program and also the veterans’ pension. These benefits are not like any other government welfare programs. This is because the social security welfare system ...
Williamson?s argument does not hold water. What he is suggesting is that Social Security is needed to care for the country?s financially unstable women. Does he mean to say that the financially unstable men are smarter and more capable in investing their money wisely? Women are just as smart as men are whether they are rich or poor, healthy or unhealthy. Williamson should realize that women are more involved in the working world and can do just as well as men when investing. Women need to be aware that they could do a lot better if they were to take their money and invest it in stocks, money markets, etc. and that they would be a lot better off then depending on Social Security. This is the kind of thing that will help women succeed in the business world. If women in other countries can accomplish this, then so can American women. Privatizing is working in other countries and is working very well. There are more than two dozen countries in South America, Europe and Asia that have adopted to, or are in the processes of adopting, the Chilean-style system of privatizing Social Security. Even Socialist Sweden is going in that direction. They are going in this direction because they know that it works.
It works so well in Britain that they are the most financially comfortable retirees in the world. The article ?Private Security? suggests that if Britain can make it work then America should be able to make it work. In 1988 Margaret Thatcher allowed British workers the option of paying a percentage of the earnings into private investments. Today this amount is up to 5 percent of their earnings and more than 70 percent of the workers are enrolled in this plan. Because of this, privately funded pensions in the United Kingdom are better than the government-funded pensions (20).
There was also a generous tax relief that promoted private pension savings in Britain. In addition the capital gains built up in private pensions are tax-free. British workers enrolled in the private plans do more than twice as well as those in the government pension plans. During the 1980?s the British private pension plan average return was 9 percent and continues to improve. The British personal savings rate of 11.5 percent is roughly twice that of the United States. The bottom line is, if Britain can do it so can America. Another country that has recognized the need to fix Social Security is France. In the article by Alexander Dorozynski ?French Plan to Bail Out Social Security System? he discusses that the French are attempting to rescue the failing Social Security program system. They are planing to tax the middle and upper class families. The families will have to pay higher contributions in to the system and their savings accounts, insurance, and capital gains will be taxed in order to receive more revenues from Social Security. If the United States is not careful this could happen and Americans will not tolerate this (763).
Social Security is definitely in a crisis and that word is not used lightly. Americans should be concerned with this because it means the future for their children, their grandchildren and their great grandchildren. If the United States does not act fast and fix the problem with Social Security by allowing the retirement portion of Social Security to be privatized then the program will surely be broke by the middle of the next century. This should be a major concern for most Americans. The program is also unfair, most people are unaware of this because they do not realize or even care to realize exactly how the money is distributed or redistributed among the retired workers. If they did know they would most likely would want to change the system. Social Security is outdated and is ready for a change. Private Security or allowing workers to invest their earnings themselves is better for everyone. Women should not be afraid to invest in the stock market and are quite cable of making a wise decision just as a man is capable of making a wise decision. Private security is working throughout the world and can work in America too. The government must give the people a chance to make decision on their own. The government will not be surprised by the result; Guaranteed!
Bibliography:
Borden, Karl. ?Social Security Privatization?. http://www.cato.org/pub/ssps/ssp1.html> April 22, 1998. Burtles, Gary. ?Social Security ?s Long-term budget outlook?. National Tax Journal 50.3 (1997) 399+. CD-ROM. EBSCOhost: Academic Search FT Select ? Disc 1. 1997. Church, George J. ?Robin Hood in Reverse? Time 150.7 (1997) 24+. CD-ROM. EBSCOhost: Academic Search FT Select ? Disc 1. 1997. Dorozynski, Alexander. ?French Plan to Bail Out Social Security System?. BMJ: British Medical Journal 315.7111 (1997) 763. CD-ROM. EBSCOhost: Academic Search FT Select ? Disc 1. 1997. Glassman, James K. ?Do-it-yourself Social Security?. US News & World Report 123.13 (1997) 50. CD-ROM. EBSCOhost: Academic Search FT Select ? Disc 1. 1997 Kotlikoff, Laurence J. ?It?s High Time to Privatize?. Brookins Review 15.3 (1997) 16+. CD-ROM. EBSCOhost: Academic Search FT Select ? Disc 1. 1997. Martin, James L. ?Personalizing Social Security?. Vital Speeches 64.1 (1997) 29. CD-ROM. EBSCOhost: Academic Search FT Select ? Disc 1. (1997).
Mashaw Jerry L. and Marmor, Theodore R. ?The Great Social Security Scare?. http://epn.org/prospect/29/29mash.html> 22 Apr. 1997. ?Private Security?. National Review 49.20 (1997) 20+. CD-ROM. EBSCOhost: Academic Search FT Select ? Disc 1. 1997. ?Social Security History?. http://www.ssa.gov/history/history6.html> 22 Apr. 1997. ?Social Security: The Funding Crisis.? Social Security and Retirement. Ed. Robert S. Mudge. Washington: Congressional Quarterly Inc, 1983. 7-27. Williamson, John. ?Should Women Support the Privatization of Social Security??. Challenge 40.4 (1997) 97+. CD-ROM. EBSCOhost: Academic Search FT Select ? Disc 1. 1997.
