assignments for sochien

Legislative History Review

By: Steven Song, Sam Oates, Claire Squire, Sabrina Chagan, and Victoria Nash

SPEA-V181

Overview

Over 25 million elderly Americans live in poverty, according to the National Council on Aging

(2018). While this startling number requires remediation, it is estimated that half of all elderly

Americans would live in poverty without Social Security. This legislation was designed to

provide relief for those suffering unemployment and poverty because of the Great Depression:

dependent widows, children without parents, unemployed workers, and retirees. Social Security

is a pay-as-you-go system in which 6.2% of each worker’s income is taxed, up to a cap, to pay

for current recipients’ benefits. Today, the program still provides crucial benefits, but is in

danger of running out of funding due to increased recipients and decreased workers. To ensure

that future generations receive benefits, funding must be increased or spending cut. Previous

pieces of legislation in the United States and abroad attempted address this issue: a 1983

Amendment to Social Security requires that government employees pay into the system, and in

France, a 2012 bill allows citizens to opt out of receiving benefits (French-Property, p.1, 2018).

The following review of current legislation reveals the importance of preserving Social Security

for future generations. Unfortunately, the high voter turnout and consequent influence of

America’s elderly has resulted in legislative inaction. However, there is still time to save Social

Security, and the most effective strategy to achieve that goal is the demolition of the income tax

cap.

Social Security Legislation

1939 Amendment- The 1939 Amendment to Social Security added two new categories of

recipients to the program: spouses and minor children of retirees, and family of covered workers

that died prematurely. This adjustment shifted Social Security from a worker-based program to a

family-based socioeconomic security program. Additionally, the Amendment extended benefits

to workers in the government, law, and agriculture sectors, as the original legislation limited

receival of benefits to workers in industry and commerce. The Amendment also standardized the

method of determining if a worker had worked long enough to be eligible for benefits.

1983 Amendment- Through bipartisan cooperation, the 1983 Amendment reconfigured the

coverage, financing, and benefits of Social Security in response to concerns of insufficient

funding. This Amendment required that government employees pay into Social Security and

imposed a six-month delay in calculating the Cost of Living Adjustment, allowing for more

accurate inflation adjustments, reducing extraneous increases in benefits (Blahous, 2007).

Legislation in Other Jurisdictions

Social Security is not limited to the United States; over 170 other countries have assistance

programs (p.1). Countries fund their assistance programs in a variety of manners, including:

France- Following enactment of the 2012 Social Security Financing Bill, France’s Social

Security deficit was nearly halved (Gouvernement.fr, p.1, 2015). In contrast to many countries,

the majority of the funding for Social Security in France comes from contributions rather than

taxation; the people of France may opt out of Social Security if they do not want to pay their

employee wage contributions (French-Property, p.1, 2018).

Egypt- Social and Insurance Law No. 79 of 1975 was enacted to reframe Egypt’s system and set

new parameters for Social Security (Trading Economics, p.2, 2018). As a result, receival of old

age pensions and disability settlements requires that citizens contribute to the Social Security tax,

and typically 10 to 120 contributions are required (Social Security Administration, p.1, 2017).

By observing the successes and failures of other countries’ assistance systems, the United States

may discover legislative strategies that have the potential to reform Social Security for the better.

Federal Response

1970s- Social Security has continuously expanded to include more citizens, but the federal

government has not likewise expanded its means of paying for the program. In the first three

years of the 1970s, Social Security benefits were increased by 15, 10, and 20% respectively, and

expanded to include a minimum benefit, given to retirees who had not paid into the system.

Post 1970s- Since the 1970s, minimal legislation has been passed, except for the Bush

Administration tax cuts of the 2000s that solidified the income tax cap, decreasing the amount

that high-earning Americans contribute to Social Security. In 2017, for example, due to the

income tax cap, all Americans earning income of $128,400 or higher, including the extremely

wealthy, were taxed the same amount for Social Security: $15,772.80.

Modern Issues- Currently, Baby Boomers are retiring at a higher rate than the rate at which

young people are entering the workforce. Legislative action by the federal government is

necessary, but is lacking, as ensuring future generations receive Social Security will require

either that benefits be cut, or taxes raised, both of which are politically unpopular decisions that

negatively impact the elderly, a powerful voting group.

Improvements to Legislation

Social Security faces an unknown future due to insufficient funds and a growing population

dependent upon the program. Additional legislation pertaining to Social Security may help

sustain the program amid great expansion of beneficiaries. To ensure younger generations

receive Social Security, it is recommended that the income tax cap be lifted, requiring that all

citizens be taxed 6.2% of their income. This recommendation increases Social Security funds by

eliminating the tax cap for wealthier citizens, increasing policy equity and enabling Social

Security to be a fiscally viable program for years to come.

Works Cited

Blahous, Charles P. “The 1983 Social Security Reforms: Real and Misremembered Lessons for

Today’s Leaders.” Hudson Institute, Hudson Institute, 27 Feb. 2009,

www.hudson.org/content/researchattachments/attachment/705/1983_social_security_refo

rms.pdf

Elderly Poverty Statistics - Economic Security. (2017, August 10). Retrieved from

https://www.ncoa.org/news/resources-for-reporters/get-the-facts/economic-security-facts/

French-Property. (2018). Tax France: Social Security Contributions in France. Retrieved from

https://www.french-property.com/guides/france/finance-taxation/taxation/social-security

Gouvernement.fr. (2015). The Social Security Financing Bill For 2016. Retrieved from

https://www.gouvernement.fr/en/the-social-security-financing-bill-for-2016

History.com Editors. “Social Security Act.” HISTORY, A&E Television Networks, 26 Jan. 2018,

www.history.com/topics/great-depression/social-security-act.

“A Hope of Many Years.” Social Security, SSA's Office of Legislation & Congressional Affairs,

24 Apr. 2015, www.ssa.gov/history/video/.

Social Security Administration. (2017). Africa, 2017 (Egypt). Retrieved from

https://www.ssa.gov/policy/docs/progdesc/ssptw/2016-2017/africa/egypt.pdf

Social Security Administration. (2017). Social Security Throughout the World. Retrieved from

https://www.ssa.gov/policy/docs/progdesc/ssptw/

“Social Security.” Social Security History, SSA's Office of Legislation & Congressional Affairs,

20 Apr. 1983, www.ssa.gov/history/1939amends.html.

“Social Security.” Social Security History, SSA's Office of Legislation & Congressional Affairs,

26 Nov. 1984, www.ssa.gov/history/1983amend.html.

Trading Economics. (2018). Egypt Social Security Rate for Employees (2004-2018). Retrieved

from https://tradingeconomics.com/egypt/social-security-rate-for-employees