POL 327 Social Security Crisis
The Government Pension backup money is anticipated to run out by 2035. Society Agency'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 similar circumstance occurred decades
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
privatizing or reducing benefits. Instead of changing the system, they would want to see Social
Security supplements implemented. Under a system of pension portability, 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 accomplished in 1983.
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. Congress must act right away
to guarantee the elderly's benefits in the future since 15 million of them depend on their monthly
payments to keep them out of poverty (Arnav, 2021). 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. In order to address the related situation, A two-step, $1.9 trillion
proposal to revive the deep recession was presented by Joe Biden.
The existing proportion 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). In order to
prevent benefits from being reduced by inflation, this rate is based on the Consumer Price Index
(CPI), according to SSA.gov. The fact that American reproduction is below the viable
replacement rate is another issue that is threatening Social Security. In other words, a perfect
storm has been produced by rising compensation percentages combined with data indicating
historically 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 retirement laborer's partner
and their kids and payouts to a registered laborer's survivors in the case of an early death. The
legislation also boosted benefit levels and switched the platform's distribution method from an
annual lump sum to rent installments.
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).
For an increase in their benefits, recipients no longer had to wait for Congressional approval.
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.
Regrettably, there were still problems with short-term finance. The Greenspan Commission was
established by President Reagan in 1983 to investigate the financing problem and offer
legislative options. Political authorities enacted the 1983 Social Security Reform legislation with
a bipartisan compromise, which created enough revenue to sustain the trust fund as well as
establish a $2.7 trillion surplus. All taxes from Social Security payouts have to be remitted to the
program as part of this change. This law raised the full retirement age to account for the reality
that people are now living longer (FRA).
References
Duehren, A. (2022, Jun 02). Social Security Reserves Expected to Be Depleted in 2035,
Year Later Than Prior Projection; Economic growth bolstered trust fund, pushing out date for
when benefits could be diminished. Wall Street Journal (Online) https://ezproxy.snhu.edu/login?
qurl=https%3A%2F%2Fwww.proquest.com%2Fnewspapers%2Fsocial-security-reserves-
expected-be-depleted%2 Docview%2F2672396937%2Fse-2%3 Accountid%3D3783
Kapur, S. (2022, August 28). Democrats hammer Republicans over Social Security as
GOP candidates grab the “third rail.” NBC News. Retrieved September 13, 2022, from
https://www.nbcnews.com/politics/congress/democrats-hammer-republicans-social-security-gop-
candidates-grab-third-rcna43925
RepublicanViews.org. (2018, February 4). Democratic Views On Social Security |
Republican Views. |. Retrieved September 13, 2022, from
https://www.republicanviews.org/democratic-views-on-social-security/
Vernon, S. (2013, February 28). Two sides to the Social Security funding debate. CBS
News. Retrieved September 13, 2022, from https://www.cbsnews.com/news/two-sides-to-the-
social-security-funding-debate/
Arnav. (2021, December 31). Social Security Facts & Stats. Balancing Everything.
Retrieved September 13, 2022, from https://balancingeverything.com/social-security-facts/#:
%7E:text=Social%20Security%20 Facts%20%28 Editor%E2%80%99s%20Choice
%29%201%20As%20of,receivable%20in%202021%20is%20%243%2C895.%20More%20items
%20
