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The Pros And Cons Of Privatizing Social Security

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During the 1950s, the average woman had three children in her lifetime, but by 2002, the fertility rate decreased to an average woman having only two children in her lifetime. Declining fertility is so significant because it implies that there is going to be fewer people in the workforce that can support the growing population of the older generations. Subsequently, the payroll taxes that went through the Social Security system in 2017 was not enough to cover benefits that were guaranteed. However, the Social Security Trust Fund was able to “cover the shortfall until 2041” (npr.org), which means that the Social Security system will be able to remain solvent. Even though the system is still able to provide the guaranteed benefits to the people, …show more content…

It is concluded through several surveys that privatizing Social Security receives more positive feedbacks compared to other methods such as cutting benefits, and raising retirement age. However, there are also many negative feedbacks about privatizing Social Security. Both the positive and negative feedbacks puts emphasis on the possible economic consequences it may or may not bring to the people. The American people’s views on Social Security reform are divided and “differ across different socioeconomic groups”. (Who Wants to Privatize Social Security? …show more content…

Aubuchon, Craig P., and David C. Wheelock. “Can Social Security Survive the Baby Boomers?” Economic Research - Federal Reserve Bank of St. Louis, 2007, research.stlouisfed.org/publications/economic-synopses/2007/09/02/can-social-security-survive-the-baby-boomers/.
Ydstie, John. “Baby Boomers Begin to Claim Social Security.” NPR, NPR, 1 Jan. 2008, www.npr.org/templates/story/story.php?storyId=17767992.
Peterson, Jonathan. “Future of Social Security Program for Americans.” AARP, 0 July 2015, www.aarp.org/work/social-security/info-2015/future-of-social-security.html.
José Piñera This article appeared in Investor’s Business Daily on December 17,1997., Cato Institute. “Chile's Social Security Lesson For The U.S.” Cato Institute, 17 Dec. 1997, www.cato.org/publications/commentary/chiles-social-security-lesson-us.
Devroye, Dan. “Who Wants to Privatize Social Security? Understanding Why the Poor Are Wary of Private Accounts.” Public Administration Review, vol. 63, no. 3, 2003, pp. 316–328., doi:10.1111/1540-6210.00292.
National Committee to Preserve Social Security & Medicare, "The Truth about Social Security and Privatization," ncpssm.org, 17 Aug.

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The social security is a costing system and it occupies a big proportion in the government spending. In Barbara R. Bergmann’s article “Could Social Security Go Broke?,” she deems that there is enough fund in the social security system and the government can easily transfer the tax income from current employees and firms that employ these employees to the social security to support retirees’ lives. This point of view only can be considered as assumption, but not for the real world. After the finacial crisis in 2008, a large number of employees were laid off during that time and some employees decided to retire early, which results the labor force in American has shrunk. In the meantime, the presence of effective technology products,

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(“Roosevelt’s Experts”) (“Social Security; A Program and Policy

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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,

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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.

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putting the security of these civilians a risk, defeats the whole purpose of social security, which is why the privatization of Social Security would be foolish. A major risk of privatization is that the transition from a “pay as you go” system to a fully funded system would be very difficult to manage, for many reasons. Currently, the taxes paid by each generation of workers fund the retirement benefits of the previous generation of workers. While each generation of workers has been confident that its retirement would be financed by the next, this confidence is eroding (Pollard 1).

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The AMAC is against raising the payroll taxes, thus different groups of senior citizens have varying opinions on expanding the payroll cap. But due to their membership in multiple organizations that are concerned with Social Security reforms, it is shown that senior citizens care about reforms to Social

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It marked a shift in the role of the national government, as it established a system of retirement benefits for seniors and more such as unemployment insurance, aid to dependent children, and disability insurance. These programs helped provide safety for Americans who were struggling during the Great Depression, and they continue to provide support to millions of Americans today. The program was designed to assist older Americans who were unable to work, and it has been instrumental in reducing poverty among seniors. According to History Editors, the “Social Security Act”, the president “created Social Security, a federal safety net for elderly, unemployed, and disadvantaged Americans. The main stipulation of the original Social Security Act was to pay financial benefits (Social Security Act).”

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Charles Fusco, Federal Writers’ Project interview in which he offers his perspective on the New Deal, “Roosevelt Is a ‘Damned Good Man’” says, “This social security measure gives some protection to 30 million of our citizens who will receive direct benefits through unemployment compensation, through old-age pensions, and through increased services for the protection of children and the prevention of ill health.” “It will act as a protection to future Administrations against the necessity of going deeply into debt to help the needy. It is, in short, a law that will take care of human needs and at the same time provide the United States with a sound economic structure”(SQ 3, E). Social security was very important to the Success of the New Deal. The text says, “Social security was a piece of this change, signaling Americans viewed the government as responsible for ensuring that older Americans would live decent lives.

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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

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Now, Social Security is outdated and needs to be reformed. The Social Security Act was passed over 80 years ago. Since 1935 there have been many amendments to the Social Security Act, but it has never been reformed. It is still not up to date with the 2016 economy (“How Does the Social Security System Work?”).

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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.

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1977 Words | 8 Pages

The Christian Science Monitor, a newspaper, stated, “‘Between the steady, dependable, competent worker and the irregular, unreliable and incompetent one, the burden of taxes and benefits is disproportionately in favor of the later....’” (“Social Security Act Is Viewed As Jobs Diminisher” 1935). The benefits are in favor of the incompetent workers because of the taxes being imposed on the competent workers. The victims of the taxes imposed by the federal government were irate, yet they had little say in changing the Act.

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As mentioned in the video, people who are retired mostly rely on savings, pensions, and Social Security to live, but most jobs and companies provide very limited pensions - not enough for retired employees to rely on to survive. It is also very hard to save up a large amount of money even for people with 401K or 403B retirement plans due to the high rent and living costs most Americans face as workers, especially people who earn less will also be able to save less. This causes the majority of people to rely on Social Security after they lose their stable annual income. But this also means that if the US runs out of money for Social Security, retired people and people in need will likely lose around 25% of their financial supply, and this is a large enough cut for these people to face survival issues, especially with the ever-increasing market price and inflation, and this is going to drive a larger portion of the population into poverty. One of the consequences of people having less money is that people are less likely to spend because they still have to pay for housing and less money will result in them having less money available to spend on even basic necessities.

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In the midst of today’s economic turmoil, an on-going debate regarding the viability of the Social Security program is resurfacing and facing serious conflict. Many politicians avoid the controversy of the program because there honestly seems to be no favorable answer that can address the masses and appease everyone. As of June 30, 2011, 57.7 million people or 18.2% of the U.S. population were receiving monthly Social Security benefits.[1] Currently, the program’s future is questionable, many citing that, “the Social Security system is experiencing a declining worker-to-beneficiary ratio, which will fall from 3.3 in 2005 to 2.1 in 2040.” (Social Security Bulletin, 1) There have been several suggestions on how to “fix” the broken system, including

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Every time a baby is born in the U.S. they are given a social security number. This number will continue to be important until the day that they die. Young people often do not know the importance of Social Security except the fact that it is used often for identification purposes. In recent years there has been a lot of talk surrounding the Social Security system and the current crisis that it is facing. Of course there are many possible solutions to combat this crisis, but none without their faults.

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