... loved years. This worked in 1940, when there were 42 workers for every retiree. But, thanks to longer life spans, fewer children, earlier retirement, and other changes, there will soon be only two workers paying into Social Security for every retiree drawing checks out. That can't work" (Glassman 13). The baby-boomer issue is not the only problem facing the future of the budget regarding Social Security.
The Social Security Trustees Report projects that population growth is expected to slow over the next several decades. This slowdown is expected to lower the rate of population growth making older groups and retirees a very large percentage of the population. The labor force participation (by percentage) will therefore decline as the average age increases (OMB, 1998 Federal Budget 196). This decrease in the number of Social Security paying workers will undoubtedly make for abatement in the total amount of Social Security taxes collected each year to be distributed in services. As this occurs the Federal Government would have to borrow money to pay its obligations to those with Social Security assisted living, increasing the federal debt. Rose 3 Another criticism of social security is the attacks on the fact that it pays Old Age, Survivors, and Disability Insurance (OAS DI) + to those persons regardless of their wealth or lack of it thereof.
This practice, even though it was established to be non-discriminatory, has been rebuked by many persons of poorer backgrounds because it takes away from the extra benefits that they could be receiving and pay it to some persons who may not need it as extremely. Retired workers account for 61% of all social security recipients and of those 60% rely on it for half or more of their total income. Because this total amount usually is not too great, they feel they should be getting more by cutting the benefits paid to the other 40% that rely on it for half or less of their total income (OMB, 1998 Budget 196). A very practical, and yet controversial, method being proposed for saving is that of lowering the Cost Of Living, or making a Cost Of Living Adjustment (COLA).
Last year it was discovered that the consumer price index (CPI) has been over-stating the annual cost of living by 1. 1%. Social Security payments are directly tied to the CPI and determine the annual payment amounts. In other words, beneficiaries have been doing a little better than the true rate of inflation.
Simply by reducing the CPI by 1. 1 percent a year the government could save approximately $1 trillion in 12 years (Thomas 2). The benefit payments would still rise with the true cost of living, but the Social Security trust funds would be able to remain solvent well past the expectation dates proposed by the trustees. This simple solution also has been thwarted by political apprehension. US economist Daniel Patrick Moynihan, states, 'politicians are scared of each other and the AARP' (Thomas 2).
The final proposal by radicals is to abolish many programs, including Medicare, which may not be necessary to the substantial living of some individuals. They also feel that a means test be established to decide who and who does not need assistance. These ideas have been mostly shot-down due to a favorable opinion of the Social Security system in general, and the fact that it requires more government regulation to institute the means tests (Thomas 4). All of the plans are impractical, if applied solely. Alone, each creates large practical risks for the system.
Perhaps the best plan is to drop economic ideals and to find a compromise in the different economic fervor's that put the idea people at each other's throats. A solution may be found to solve the different aspects of Social Security by combining different plans. The president needs to appoint an independent (completely independent) and non-partisan committee to propose a Rose 6 total solution that would ensure complete payment of all Social Security entitlements for at least the next 75 years. Perhaps with this, a real fix can come about so the up-coming generation (Gen-X) will receive benefits that are currently being paid from earnings (Thomas 3). President Bush is depending on CEOs for the revision of Social Security. Most are involved on the record, and the rest give other forms of support.
Still business leaders stay neutral in the dispute about our nations largest federal program. Former New York Democratic Senator Daniel Patrick Moynihan co-chairs the President's Commission to Strengthen Social Security fear's that today's system is traveling into an unavoidable demographic wall. 'In 1960, there were five workers for every retiree,' they explained in an interim report last July. 'Now there are slightly more than three.
Before long there will be just two. This downward trend in the ratio of workers to retirees, under the existing system, would require either painful tax increases, significant benefit cuts, or astronomical levels of borrowing' (Murdock 22). President Bush, forging ahead with his plans for Social Security reform despite advice from some to delay it, appointed a 16-member panel that will submit specific proposals this fall. Former Sen. Daniel Patrick: Moynihan (D. -N.
Y. ) and Richard Parsons, chief operating officer of AOL Time Warner, wilt co-chair the commission. Bush wants to allow younger workers to put some of their payroll taxes into personal retirement accounts that can be invested in the stock market, and has apparently filled the commission with that goal in mind. Senate Minority Leader Tom Daschle (D.
-S. D) noted, 'I don't know that there's anybody who would dispute the fact that this commission is already a predetermined group that will be organized for a clearly desired result to privatize Social Security" (Human Events 2). In conclusion, the United States Social Security program started back in 1935 has experienced 66 years of developing and reforming. During the last 66 years, this program has achieved a lot for providing benefits to retired workers and their dependents.
The legislation also has successfully improved the Medicare, disability treatment and the Cost-of-living Adjustments. Although the low rate of turn is a considerable problem of the Social Security system, I believe as Bush has predict, his reform of allowing private investments of payroll taxes would eventually prevent our Social Security from bankrupted and bring people a higher standard of living. Works Cited " Social Security reform is gonna happen." The American Enterprise; Washington; Oct/Nov 2001; James Glassman " Social Security reform calls for leadership." Chief Executive; New York; Oct 2001; Derby Murdock." Social Security Reform." Human Events, 05/07/2001, Vol. 57 Issue 17, p 2, 1/9 p. web, Thomas. 'Social Security Alternatives.' New York: Capital Publishing Ltd.
, 1996. United States. Office of Management and Budget. Implementing Welfare Reform. Washington: OMB, 1997.