Social Security Benefits
"We can never insure one hundred percent of the population against one hundred percent of the hazards and vicissitudes of life, but we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age."-- President Roosevelt upon signing Social Security Act of 1935
Social Security
Macroeconomics
When most people imagine the Social Security System, they conclude that it is merely a retirement program. What we do not realize is that a portion of the Social Security taxes we pay are for provisions for workers and their families. In actuality, the survivors insurance we have under the Social Security System is slightly more than an individual's life insurance. When we depart from earth, specific persons in one's family may be entitled for survivors' assistance. These individuals may include widows / widowers (divorced widows and widowers), children and dependent parents.
Social Security is significant in the sense that it has helped protect millions of workers from poverty in their senior years. It is emotionally stressful and devastating when dealing with the loss of family members, which can also lead to financial downfalls for most. Social Security also intervenes in such situations and becomes an advantage for individuals affected by their loss. Additionally, this system assists in providing earnings on the behalf of families of workers who pass away. It is factual that 98 out of every 100 children can receive if their working parent(s) passes on, and Social Security disburses more benefits to offspring than any other federal system.
Throughout history, we as humans have confronted the challenges of indetermination brought about by illness, old age, possible death, disabilities, and unemployment crises. In the field of economics, these inevitable aspects of our lives are proclaimed as threats to security of our economic status and growth. In ancient history, the Greeks' form of economic security was the shape of amphorae of olive oil. This oil was nourishing and owned longevity. It could be kept in storage for extensive time frames. The Greeks would stockpile olive oil to allow themselves provisions in their times of need and this became their form of economic refuge.
The feudal system was the root connection of economic security in medieval Europe. The responsibility of economic survival of the serf workers was held by the feudal lord. The lord had economic security provided that there was a stable supply of serfs working the estate, if and only if the serfs were adequate enough to bestow their labor. It is evident that relatives have continuously felt some level of responsibility to one another. Resources were often used as a secure system, mainly for the aged or frail. Land itself was a central mode of securing their economic state and was particularly imperative for those persons who possessed it or lived on farms. In an essence, the customary sources of economic security include: labor, family, charity, and assets.
It was not until 1935 that Social Security really appeared in America. However, there was an important predecessor that provided something we identified as a social security program, to a unique sector of the American populace. Subsequent to the Civil War, hundreds of thousands of people were widows, orphans, or disabled veterans. Many were disabled or became survivors of deceased breadwinners. This influenced the expansion of a pension program, which had similarities to the latter developments in Social Security.
As a result of the Stock Market Crash of 1929, the United States fell into major economic depression. Unemployment rates skyrocketed and exceeded by 25% and 10,000 banks collapsed. In 1929, The Gross National Product (GNP) was $105 billion and declined to only $55 billion in 1932. New business investments were negative $5.8 billion in the same year. Furthermore, salaries paid to workers totaled $50 billion in 1929 and declined to only $30 billion in 1932.
(Results of GNP during the U.S. economic depression)
President Franklin Delano Roosevelt announced his intention to make available a system for Social Security on June 8, 1934 in a message to the Congress. The first national town hall forum on Social Security was sponsored by the Committee on Economic Security (CES) in November 1934. The CES acquired a report to the Congress and outlined a detailed legislative proposal.
Reports were made to the President by the CES in early January 1935. On the 17th of January, President F.D.R. presented the details for consideration by both Houses of Congress. Only a few conditions were considered in very close votes, but surprisingly, the bill passed in the floor votes. The bill was not completely passed until after a conference, lasting through July, and was finally transmitted to President Roosevelt for signature approval. The Social Security Act was signed into decree on the 14th of August 1935 by the president. Also acknowledged as the Old Age Pension Act, Social Security includes compensations of a lump-sum in the case of death. The first payroll taxes were gathered and paid to nearly 53,000 recipients in 1937.
From projected collapses to an immediate crisis, reform of Social Security has been and will continue to be a key political issue for more than three decades of United States presidency, under the direction of: Gerald Ford, Jimmy Carter, Ronald Reagan, George H.W. Bush, Bill Clinton, and George W. Bush.
In today's society, studies show that social security has been dominated by misleading and inaccurate portrayals of the Social Security Trust Fund and the impact of budget surpluses on the programs finances. According to The National Center for policy Analysis Idea House, it is known that by the year 2014, current tax revenues will be insufficient to pay any current benefits and by year 2029, the Social Security Trust Funds will be worn out. They will not have supplementary funds to offer anyone due to the increase in life expectancy, the decline rate of fertility, and the rising population of the elderly. Social Security's financing problems are long term and will not affect today's retirees and near-retirees, but they are very large and serious. People are living longer, the first baby boomers are nearing retirement, and the birth rate is fairly low. As the baby boomers approach retirement, the programs annual cash surplus will shrink and then disappear. The result is that the worker-to-beneficiary ratio has fallen from 16.5-to-1 in 1950 to 3.3-to-1 today. This ratio will be 2-to-1 within 40 years. At this ratio, there will not be enough workers to pay scheduled benefits at current tax rates.
Social Security problems are very much predictable; who knows when they are going to run out of money when they are uncertain themselves. This generation may be faced with the choice of paying retirement benefits to parents or paying for the programs that will help their own children in the future. The years are passing and soon there will be no room for “wishful thinking” that can hopefully change the fact that there will be no money for them to retire. According to the Social Security Reform Center, baby boomers are in abundance, and by the year 2008 they will all begin their retirement. From the year 2025 until the time for those people that have reached the age of 62 for early retirement, every year from then we will see another reap of baby boomers. The reason being is that the older baby boomers will have not produced enough children to replace themselves. Inevitably, the number of taxpaying workers will shrink. It takes approximately 25 years to make a new taxpayer. It will not be long before the social security's annual cash drops its surpluses.
On the other hand, experts under the direction of the Social Security Administration believe that Social Security can bring about change for the people of the United States. It is evident that in recent years, progress has enhanced the reliability of social security numbers to guard against “identity theft” and to alleviate the reported wage burdens on small businesses. Social security = growth. Over time, Social Security has, indeed, expanded and become a major component of modern-day living. One in six Americans collect Social Security payments and 98% of working class citizens are employed with jobs protected by Social Security. From the drastic change in 1940, when only 222,000 people received Social Security, to today, where 49 million people are now collecting these benefits prove that over an extended period of time, change becomes apparent. We hope to see even more improvements under the Social Security System, which is left in the hands of the president proceeding our current president, George W. Bush, in the 2008 elections.
References
Clinton, H. (2007) Seniors & Social Security. Social Security. Retrieved November 15,2007 from http://clinton.senate.gov/index.ctm
Dermitt, L. (2003) Pre-Social Security Period. Historical Background &Developmentof Social Security. Retrieved November 15, 2007 from
www.ssa.gov/history/briefhistory3.html
McDermott, J. (2005) Social Security. United States Congressman Jim McDermott.Retrieved November 19, 2007 fromwww.house.gov/mcdermott/issues_socsec.shtml
Anonymous. (2007) Social Security Administration. Retrieved November 17, 2007 fromwww.ssa.gov/history/pdf/2007historybooklet.pdf
Anonymous. (2007) Social Security's Problems. Social Security Reform Center.Retrieved November 14, 2007 fromhttp://www.socialsecurityreform.org/problem/index.cfm
Bartlett, B. (1997) Social Security's Problems Accelerating. National Center for PolicyAnalysis: Idea House. Retrieved November 14, 2007 fromhttp://www.ncpa.org/pi/congress/socsec/socsec19jj.html
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