Social Security
Since its inception, the Social Security system has provided benefits to augment the income of people upon their retirement. However, current projections point to a crisis in Social Security. Experts believe that by 2038, the Social Security trust fund will have been depleted (Williamson).
This paper presents an overview of the current social security crisis and evaluates the plans to address this problem. The first part of the paper provides a history of the Social Security system, from its inception in 1935 to its current status under the federal government.
The next part then studies how the Social Security system is funded. In the final part, the paper studies the problems facing many retirees who stand to be adversely affected by the Social Security deficit. It looks at the pitfalls of privatization and other methods now being used to address the problem, such as proposed tax credits, simplifying the tax process and key changes in retirement policy.
The theory and legislation behind Social Security
On August 14, 1935 President Franklin Roosevelt signed the Social Security Act into law. This represented a shift from the previous American tradition of individualism and self-sufficiency to a form of a welfare state, patterned after late 19th century Germany and its national social insurance program. Before Roosevelt, the United States was one of the few remaining industrialized nations without such a program. Since the beginning of the 20th century, countries such as Australia, France, Great Britain, Spain and Venezuela had instituted social insurance systems designed to provide for the welfare of workers in the form of illness, old age and death benefits (Schieber and Shoven, 28).
The first workers were registered by January 1, 1937, when they also began accruing credits towards their old-age insurance benefits. The early applications were distributed through the U.S. Postal Service, with over 30 million new Social Security numbers being issued. After these numbers were assigned, the government then began collecting payroll withholding taxes, as mandated by the Federal Insurance Contributions Act (FICA). The first monthly benefits were issued in 1940 (Schieber and Shoven, 30).
Since its inception, the coverage and benefits of Social Security have been expanded. While the original Social Security Act was limited to only retirement benefits...
Social Security Administration In 1935, Social Security was designed as a program to provide a safety net for those who are disabled and as supplemental retirement income. When it was first introduced, it was designed based upon the total amount of individual earnings during their career. As time went by, the program was expanded to include spouses, the children of those who are deceased and the disabled. These transformations meant that
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