Social Security Reform in the Us

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Social Security Reform in the United States
by
Todd Goren

An assignment submitted in partial fulfillment of the requirements for PAD 620 (Foundations of Public Administration)

School of Professional Studies

National University

Professor Robert Ripley

April 24, 2013

Abstract
Reform proposals for the permanent appropriations that fund Social Security, aptly known as a mandatory entitlement along with its sister program Medicare; have dominated politics since the program’s inception. The debate focuses primarily on government spending and the need to preserve the accounts from which Social Security funding is derived from as well as ideological concerns like freedom of financial choice, the right and extent of government taxation, and wealth redistribution. Regardless of viewpoint, the consensus has been that alterations, at some level, must take place. Through commitment and compromise, changes can be made that will have lasting positive impacts on the financial security of the nation and the well-being of individual Americans alike.

Problem
Social Security is a social insurance program officially called the Old-age, Survivors, and Disability Insurance (OASDI) and is funded by current payments into the program as opposed to funds borrowed by the federal government. A dedicated payroll tax enacted by the Federal Insurance Contributions Act (FICA) collects the money from employed Americans that funds the program. Upon retirement or in the event of an unfortunate disability, monetary benefits are paid by the Social Security Administration.

Social Security has long-term funding challenges. It is estimated that the costs of this program will continue to elevate which will gradually deplete the accounts from which it is funded. According to the Social Security Trustees, the group that oversees the financial condition of the program, the costs are expected to exceed noninterest income from 2010 onward (SSA, 2012). By 2033, Social Security funds are expected to be exhausted with annual revenues thereafter only covering approximately 75% of program obligations.

Compounding this problem is the fact that more people are retiring which widens the span of the population that will be covered by Social Security. As the baby-boomer generation ages and retires, life expectancies increase, and lower birth rates continue that have spanned the last few decades, the resulting implications will be a lower ratio of paying workers to retirees.

Finally, the government has borrowed and spent the accumulated surplus money (the excess funds that are accrued and not spent on supporting the program) which not only takes away from funds that might be available for future program spending but also increases the national debt. There is much controversy regarding whether the U.S. government will be able to continually honor its obligations to the program which draws from the larger problem of U.S. national debt. A default would cause the Social Security program to implode and leave millions of Americans in financial despair.

Issues
Champions of conservative reform ideals argue that Social Security violates the Constitution and stems out of Socialist policies. In the early beginnings when the program was first proposed, then Secretary of Labor Frances Perkins was asked during a Senate Finance Committee hearing, “isn’t this Socialism?” to which she responded that it wasn’t although being pressed once again to consider this thought (Altman, 2009). The issue of the constitutionality of Social Security, however, was reviewed by the Supreme Court and the validity of the tax was upheld in Helvering v. Davis (301 U.S. 619). Libertarians question the government’s right to tax citizens in order to run a social insurance program and argue that Social Security detracts from American liberty by removing a person’s freedom to choose how to spend their money. Many Republican presidential administrations and...
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