The future of social security
"The Social Security Administration's mission is to advance the economic security of the nation’s people through compassionate and vigilant leadership in shaping and managing America's Social Security programs." (http://www.ssa.gov/aboutus/)
Social security, at it's very core, is the answer to the great depression. Part of the New Deal, it originally provided a federally funded lump sum at death and benefits to retired people and unemployed people. Funding was collected via taxes first in 1937, and the first payout check was issued in 1940.
In the 1960's, surpluses dominated the SS outlook, but in the 1970s, deficits were projected. Carter tried to fix it through 2030, but his plan failed. Which leads us to today.
Social security is at a crossroad. As it stands now, there will be more and more people collecting and less people providing. Eventually, the ratio between beneficiaries and suppliers will lessen to the point of one person supplying the aid to one other person, which would cause massive financial stress for workers. Negative cash flows are expected in 2017 and the trust fund would be depleted in 2040. There are a few ideas as to how to solve this problem.
1. Partially or fully privatize SS. President Clinton announced this idea in a state of the union address. The proposal was to invest part of Social Security's trust fund in stocks. Bush amended this idea to having it be up to the individual on how much to invest.
2. Leave it be. The plan currently has benefits scheduled to be cut 26% by 2040, which would keep the ratio down. However, this really isn't solving anything.
3. Move money. Defense has a huge budget. Move some of that money into SS.
4. Raise SS tax. This would extend the funding pool and move the date back.
As it stands, no one is willing to make a definite point on which direction is best to take.
Speculation on my behalf suggests that option 1 would allow people to gamble, and a few would come out fine. But all it would take would be a stock market crash and BOOM back in the depression. Option 2 is not working, or we wouldn't be having this discussion. Option 3 is a hidden tax break and raise. Option 4 is never going to happen since people hate the words "Raise taxes."
Looking outside this box, it seems to me that the majority of SS is used to fund health care. While obviously not all of what it does, if the country were to create a federally funded free health care system, SS could be phased out (or drastically reduced). To make this work fully, the US's ethos concerning elderly would need to change from apathy to action. Families would remain together, with the grandparents living in their children's home, much like in Japan. This would not happen overnight, but would take considerable strain off people supporting a black box to supporting someone about whom they care.
Social security, at it's very core, is the answer to the great depression. Part of the New Deal, it originally provided a federally funded lump sum at death and benefits to retired people and unemployed people. Funding was collected via taxes first in 1937, and the first payout check was issued in 1940.
In the 1960's, surpluses dominated the SS outlook, but in the 1970s, deficits were projected. Carter tried to fix it through 2030, but his plan failed. Which leads us to today.
Social security is at a crossroad. As it stands now, there will be more and more people collecting and less people providing. Eventually, the ratio between beneficiaries and suppliers will lessen to the point of one person supplying the aid to one other person, which would cause massive financial stress for workers. Negative cash flows are expected in 2017 and the trust fund would be depleted in 2040. There are a few ideas as to how to solve this problem.
1. Partially or fully privatize SS. President Clinton announced this idea in a state of the union address. The proposal was to invest part of Social Security's trust fund in stocks. Bush amended this idea to having it be up to the individual on how much to invest.
2. Leave it be. The plan currently has benefits scheduled to be cut 26% by 2040, which would keep the ratio down. However, this really isn't solving anything.
3. Move money. Defense has a huge budget. Move some of that money into SS.
4. Raise SS tax. This would extend the funding pool and move the date back.
As it stands, no one is willing to make a definite point on which direction is best to take.
Speculation on my behalf suggests that option 1 would allow people to gamble, and a few would come out fine. But all it would take would be a stock market crash and BOOM back in the depression. Option 2 is not working, or we wouldn't be having this discussion. Option 3 is a hidden tax break and raise. Option 4 is never going to happen since people hate the words "Raise taxes."
Looking outside this box, it seems to me that the majority of SS is used to fund health care. While obviously not all of what it does, if the country were to create a federally funded free health care system, SS could be phased out (or drastically reduced). To make this work fully, the US's ethos concerning elderly would need to change from apathy to action. Families would remain together, with the grandparents living in their children's home, much like in Japan. This would not happen overnight, but would take considerable strain off people supporting a black box to supporting someone about whom they care.