ipl-logo

Pros And Cons Of Privatization Of Social Security

543 Words3 Pages

Social Security is one of the largest government programs in the world, paying out hundreds of billions of dollars per year. Social Security has paid out more in benefits than it has collected in employee taxes, and is expected to run out of money within the next few decades. Many have suggested to replace the current government administered system with the partial privatization of Social Security, thus allowing workers to manage his or her own retirement funds using personal investment accounts. Supporters of privatization believe that workers should have the option to control their own retirement investments, and that having private accounts could give retirees higher returns than the current system can. Those who oppose privatization believe that retirees could lose their benefits in a stock market downturn, and the people lack the information needed to make sensible investment decisions.
Supporters of privatization believe it could possibly make the economy more efficient and thus improving the structure of incentives. Laurence Kotlikoff argues that this would benefit some generations without impairing others. “The most important incentive affected by social security is the incentive to work. By financing social security benefits via payroll taxation, social security reduces this incentive, although the degree …show more content…

Those who privatization argue that instabilities in the financial market could threaten retirement security for those whose investments failed, “In addition, high cost of administering small accounts, marketing charges, and management fees, as experiences in Britain and Chile indicate, would take a big bite of the workers savings. Added to these problems are the high transitional costs, which are estimated to be between 1 and 2 trillion dollars over the ten-year period,” (O’Donnell, Shetty, pp.

Show More
Related

New Deal Dbq

1116 Words | 5 Pages

In the time of 1929 to 1939 the U.S. was in a consistent condition of financial melancholy that began with money markets accident in 1929. The general population of the U.S. was in a surge not to lose their reserved funds, individuals would settle on flurry choices to pull back their cash before the banks would close. The inquiry that people in general more than once tended to Roosevelt was the way to take the economy back to a viable monetary state. President Roosevelt requested the Securities Act of 1933 “to bring order out of chaos” as Roosevelt expressed in a presidential location. (Hamen 34 - 41) (“Franklin Roosevelt”)

Read More

New Deal Dbq

918 Words | 4 Pages

Before the New Deal, many conservatives often found the idea of social security to be frowned upon because of the misuse of hard working tax money going to waste. This was a significant change because throughout the great depression, the federal government was not heavily relied on for support within the workforce until after the New Deal programs were put into effect. In times of need,

Read More

Social Security Pros And Cons

1044 Words | 5 Pages

Some pros to having Social Security replaced is that the induvial has more control of its retirement fund then they will with Social Security. Private funds make Americans capable of making their own decisions about how their retirement contributions are invested. If Americans invest in private funds they are investing in private capital markets which can produce net increase depending on how the government handles the transition of Americans replacing social security with trust funds (Tanner). Although, private funds sound like a good replacement for social security “many people lack the basic financial literacy to make wise investment decisions on their own” (Privatizing Social Security). Social security has started to face many financial difficulties over the years and resorting to private funds would actually make the social security problem worse.

Read More

The Pros And Cons Of Privatization Of Social Security

826 Words | 4 Pages

“Advocates of privatization often cite other countries such as CHile and the United Kingdom, where the governments pushed workers into personal investment accounts to reduce the long-term obligations of their Social Security systems, as models for the United States to emulate. But the sobering experiences in those countries actually provide strong arguments against privatization” (Anrig 3). A report conducted in 2004 from the World Bank, once an enthusiastic privatization proponent, expressed disappointment that in Chile, and in most other Latin American countries that followed in its footsteps, “more than half of all workers are excluded from even a semblance of a safety net during their old age” (Anrig 3). These reports, among others, indicate that the costs that come with relying on a system of such risk would result in a exclusion from a lack of a “safety net” and a reliance on new, untrusted government

Read More

Fdr Accomplishments

1297 Words | 6 Pages

The idea was thought of by some to be an outrageous proposal, but is now widely accepted by both liberals and conservatives everywhere. Similar to minimum wage, social security was also thought of as a radial form of collectivism back when it was established. (“Franklin D. Roosevelt” 2016) Social security works by adding a tax on everybody's pay, that is kept track of so when they retire, it can be paid back to them by the government. It is a way of guaranteeing a person saves for retirement.

Read More

Social Security Dbq

1289 Words | 6 Pages

In the year 1934 the American government would begin to answer it’s people’s call with President Roosevelt’s creation of the Committee on Economic Security (CES). Their task was to study economic insecurities within the United States and create a detailed legislative proposal as the basis for the Social Security Act. To accomplish this the CES completed a study that, according to the Social Security Administration themselves, was a milestone for the time: “Their full report was the first comprehensive attempt at this kind of analysis in many decades and it stood as a landmark study for many years“ (Social Security Administration, n.d., Header 16 Paragraph 1). With a recent diverse and detailed study to base their recommendations off of, the

Read More

Why Should The Government Privatize Social Security

681 Words | 3 Pages

The American Social Security program is in a troubling start. Funding for the program is slowly starting to trickle away as more and more citizens are starting to receive these benefits. The government needs to change something to try and fix this problem. Privatizing the social security program to allow banks to take over the program is one way politicians and economists have considered fixing the issues. This would allow the government to cut back spending in the area, allow the citizens to control more of their own retirement, and allowing them to get a higher return for their lifetime investments into the program.

Read More

Social Security Privatization Essay

446 Words | 2 Pages

Thus government’s foreboding promise of paying today’s workers their social security seems only a little bit optimistic. A shift from current program of Social Security to personalized fully funded program will be advantageous for today’s workers. Since they are not required to pay Social Security taxes any more, their personal disposal income will rise. They will themselves plan for their retirement and hence might start saving more. This may result in an increase in the current U.S. saving

Read More

Social Security Act Pros And Cons

579 Words | 3 Pages

Despite being a widely popular program amongst nearly all American people, it is a hot topic for debate on Capitol Hill. Talks of cutting Social Security benefits have caused a small uproar amongst the people and families of people that rely on their Social Security benefits to live. Both sides of the US political system, Democratic and Republican leaders have been trying to find compromises to potentially cut corners on the Social Security benefits many people rely on. I feel that this program is in fact valuable today.

Read More

Pros And Cons Of Privatizing Social Security

844 Words | 4 Pages

Social Security not only benefits the rich but also the poor. The controversy I will be focusing on in this paper would be the privatization of Social Security. Should Social Security be privatized? According to the debate.org site, 75% of people disagree with the fact that Social Security should be privatized.

Read More

Essay On Social Security Privatization

494 Words | 2 Pages

Privatizers fill this funding gap by dramatically cutting Social Security benefits. They cover the rest by borrowing money, thereby increasing the debt burden on all taxpayers by trillions of dollars over the next half century. With market-based accounts, the risk of an adequate retirement is placed entirely on the individual. (2) If Social Security is privatized it will not help the government bureaucracy issue, in fact this issue will expand to be exact.

Read More

Old Age Insurance In The 1930's

1732 Words | 7 Pages

The small amount of companies that offered these pensions only covered a miniscule percentage of the labor force, the financing of the pensions was irresponsible due to the lack of actuarial calculations, and business firms promised a reward for long faithful service but without legal guarantees failed to meet the agreements. Up until 1935 there was never a mention of compulsory, contributory old-age insurance in the U.S., which would eliminate many of these problems. The widespread suffering caused by the Great Depression brought support for numerous proposals for a national old age insurance system. “The best estimates are that in the early 1930’s over half of the elderly lacked sufficient income to be self-supportive” (Haber).

Read More

Argumentative Essay: Should Social Security Be Paid?

321 Words | 2 Pages

In recent discussions of Social Security, a controversial issue has been whether it should affect all wages. On one hand, some argue that it should. From this perspective, Social Security funds the elderly and disabled; the ones who can use economic assistance. In the words of one of this view 's main supporters, “Social Security Benefits keep more than 21 million seniors out of poverty each year. Social Security provides the majority of cash income for almost two thirds of the elderly.

Read More

Argumentative Essay On Social Security

548 Words | 3 Pages

What I don’t believe is that the government should force people to pay for a Social Security program through taxes that has no way of being properly funded in the future. Ryan Messmore in the article A Moral Case Against Big Government describes a good but limited government as one that “serves its citizens by exercising well its particular task and refraining from other” (Messmore, 2007).

Read More

Persuasive Essay On Social Security

1002 Words | 5 Pages

As a society we need to accept that it is up to our generation to fix this issue. Reforming Social Security will benefit everyone living in the U.S. in the long run. Restoring Social Security to its once former glory is a necessity to benefit our further generations and to create a better future for the next generation of workers. In order to accomplish this lofty goal I propose that we increase the payroll tax cap to boost Social Security’s funding and reduce benefits for the higher income earners who do not need Social Security as much as others do. The majority of Social Security’s income originates from the Social Security payroll tax.

Read More

More about Pros And Cons Of Privatization Of Social Security

Related Topics

Open Document