SOCIAL SECURITY

Social security paper assignment



Social security paper assignment

History

Social security was a social insurance program created in 1935 as part of the second stage of the New Deal during the Franklin Roosevelt administration. Social Security was created in response to the more radical proposals by Senator Huey Long and Francis Townsend. Social Security has three main provisions: It provides aid to those with disabilities, survivor insurance, and a pension for the elderly and retired. Social Security is one of the most popular federal government programs and is considered so sacrosanct that has been dubbed the “third rail” (untouchable; derived from the electrified third rail of a railway) in American politics.

For decades, public officials advocated the creation of a social insurance program. As president, Theodore Roosevelt advocated the adoption of a social security program. He cited the fact that Germany, which implemented social insurance legislation in 1889, possessed more advanced social insurance laws than the United States. In 1909, the first old-age pension legislation was introduced in Congress. When Theodore Roosevelt ran for president as the head of the Progressive Party, he supported a social insurance program for those who were retired or with disabilities. In 1912, Isaac Rubinow wrote Social Insurance, which influenced Roosevelt. In 1915, old-age pension legislation was enacted in Alaska. In 1923, old-age pension legislation was enacted in Montana and held to be constitutional. In 1930, California enacted old-age pension laws (Burns, 1956.

Currently, Social Security is funded through payroll taxes on workers and their employers. The total payroll tax sums to 15.3 percent of income up to the maximum taxable amount, which was $90,000 in 2005. The worker and the employer each pay half of this amount, which is 7.65 percent of the salary. Of this amount, 5.3 percent is devoted to the Old-Age and Survivors' and Disability Insurance (OASDI) program, 0.9 percent is devoted to disability insurance, and 1.45 percent is devoted to Medicare, which provides health insurance to those over age 65.

Funding issues have motivated a number of reforms for Social Security since the 1970s. Most notably, Alan Greenspan headed a commission to examine Social Se-curity's funding in 1983. The Greenspan Commission called for, and Congress subsequently passed into law, an increase in the normal retirement age to gradually extend from 65 to 67, increases in Social Security tax rates, and the addition of new taxes for the benefit of the wealthiest individuals. The goal was not only to solve the immediate financial problems, but also to build up a surplus over the next few decades in anticipation of the inevitable Trust Fund drain resulting from the coming baby-boomer retirement.

That Social Security is expected again to undergo funding shortages at some point in the future should come as no surprise. While Social Security is meant to be pay-as-you-go, three trends will make this an increasingly difficult task despite the present surpluses. First, the baby-boom cohort is of unprecedented size and will begin retiring in less than 10 ...