POL 327 Final
The Social Security reserve money is anticipated to run out by 2035. Social Security's expenses
surpassed its revenue in 2021, and this trend is anticipated to continue in the years to come
(Duehren, 2022). A long-term financial burden has been caused by the aging of the "baby
boomer" group and the gradual reduction in birth rates. A substantialism transpired years before,
which prompted the Social Security Amendment of 1983, a major revamp of the system. This
amendment amended the full retirement age, the FICA tax rates, and how future cost of living
increases are determined. In order to receive their full benefits, seniors must wait longer to retire;
else, their monthly payments would be reduced. Politically, republicans and Democrats disagree
on how to stop the Social Security surplus from shrinking. Democrats favor restoring the
viability of the Social Security System without outsourcing or reducing spending. Instead of
modifying it, they would want to see Social Security subsidies implemented. Under a system of
income transfer, Democrats hope to make it easier for Citizens to get more retirement income
and ensure that they do not lose their pensions in the event that they move employment.
Republicans are in favor of a comprehensive Social Security system overhaul that would lower
the long-term costs of the program. The Republican Study Committee has out a budget that, in
essence, would raise the retirement age and, in the long run, reduce benefits (Kapur, 2022). I
believe that this was previously done in 1983, and although it temporarily resolved the Social
Security problem, 40 years later we still find ourselves in the same situation. Now, 75 million
workers, or close to half of the workforce, do not have access to employer-sponsored retirement
plans (RepublicanViews.org, 2015). While seniors would not be forced to rely entirely on Social
Security as their income, a system of supplemental retirement programs for People would reduce
the expense of Social Security. For the elderly to continue to get benefits, Congress must act
immediately.
What brought us here, then? It is well known that the COVID-19 pandemic had major
ramifications, including record-high unemployment rates of 14.8% (Faulk et al., 2021), a 4.8%
decline in GDP (Hutt, 2021), and a global disruption of trade. President Joseph Biden unveiled a
two-step, $1.9 trillion plan to revive the faltering economy to address the corresponding crisis.
The current percentage of inflation is 9.1%, which is the highest rate in the past 40 years, as a
result of several causes. Social Security and Supplemental Security Income will increase by
8.7% starting in January 2023 due to a recent Cost of Living Adjustment (COLA). This rate is
based on the Consumer Price Index (CPI), according to SSA.gov, to guarantee that benefits are
not reduced by wage growth.
The notion that American reproduction is below the viable replacement rate is another issue that
is threatening Social Security. In other words, the ideal storm has been produced by rising benefit
rates combined with stats showing record-low birth weights. The Social Security Act has
undergone several revisions and additions since President Franklin Delano Roosevelt signed it
into law in 1935. The Social Security program initially primarily offered workers' retirement
benefits. The 1939 amendment introduced two additional elements to the program: payments to a
retired laborer's loved ones and compensation to a registered laborer's survivors in the case of an
early death. The change also raised benefit levels and switched from the program's prior annual
unit price distribution to monthly bills.
Over the 1940s and 1950s, the program saw essentially no alterations. Unfortunately, low-level
payroll taxes were used to support the program, and the amount of benefits paid out was
minimal. Amendments to boost benefits, now known as Cost of Living Allowance, were
introduced in the 1950s to counteract the low payments and the inflation rate (COLA). Benefits
weren't increased again until Congress passed new laws doing so. This provision was modified
by legislation in 1972 to provide automatic COLAs based on the Consumer Price Index (CPI).
The need for Legislative permission to enhance claimants' compensation was eliminated.
It quickly became clear that there were budget problems on the short and long terms following
the 1972 amendment. The short-term problem was related to the weakening economy, and the
long-term problem was related to the baby boomer generation. By 1979, it was anticipated that
the trust money would be gone. This catastrophe reflects our current situation rather well.
Another amendment was adopted in 1977 as a fix. This resulted in an increase in the wage base,
a rise in the payroll tax from 6.45% to 7.65%, and a minor reduction in benefits. These
modifications tried to address the immediate problem while stabilizing the long-term problem
over the next 50 years.
