Custom papers academic service


Thesis statement for social security and retirement

At this point Social Security will become a net drain on the budget as it begins to draw upon its claims on general revenues. The pay-as-you-go tax rate will be 13. Including Medicare Part A, the payroll tax cost rate will be 17. In 2042, all of the assets in the Social Security trust fund will be exhausted, leaving the program able to pay only 73 percent of promised benefits. The pay-as-you-go tax rate will be 17. Including Medicare Part A, the tax rate will be 25.

By 2050, the Congressional Budget Office estimates that the cost of Social Security, Medicare and Medicaid combined will consume nearly 18 percent of GDP, almost all total federal revenues assuming that taxes remain in the range of about 18 percent of GDP as they have over the past 40 years. Including Medicare Part A, the tax rate will be 26. By then the program will be able to pay just 68 percent of that year's promised benefits.

The pay-as-you-go tax rate will be 19.

Including Medicare Part A, the tax rate will be 32. The table above underscores an important point: Social Security reform is a much more critical issue for today's young than today's elderly. The current system is more than adequate to meet its obligations to those who are already retired. However, the system can't afford all of the benefits it promises to today's workers. Those with the greatest stake in this debate are therefore the so-called Gen X'ers and younger, and it is this segment of the population most overlooked in the Social Security reform debate.

Public opinion surveys have indicated declining confidence in Social Security over the past 25 years. Many younger workers are beginning to discount Social Security entirely in their retirement planning. This decline in public confidence is itself a major problem for a system that depends critically on everyone's approval and trust.

Social Security is a generational compact in which each generation's welfare depends directly upon the willingness of the next generation to participate. If the next generation grows disaffected, the survival of the system is thrown into question. It is worth recalling that President Bush is not the first president in recent years to put Social Security on the political agenda. In 1998, President Clinton made Social Security reform one of his top domestic priorities.

Today, the system is sound, but we all know a demographic crisis is looming. There are 76 million of us baby boomers now looking ahead to retirement age and longer life expectancies. By 2030, there will be twice as many elderly as there are today, with only two people working for every one person drawing Social Security. After 2032, contributions from payroll taxes to the Social Security trust fund will be only enough to cover about 75 cents on the dollar of current benefits.

We know the problem. We know that if we act now it will be easier and less painful than if we wait until later. I don't think any of you want to see America in a situation where we have to cut benefits 25 percent, or raise inherently regressive payroll taxes 25 percent, to deal with the challenge of the future and our thesis statement for social security and retirement to our seniors.

I can tell you, I've spent a lot of time talking to the people I grew up with; most of them are middle-class people with very modest incomes and they are appalled at the thought that their retirement might lower the standard of living of their children, or undermine their children's ability to raise their grandchildren.

So let's do something now in a prudent, disciplined way that will avoid our having to make much more dramatic and distasteful decisions down the road. President Clinton ended with an admonition that is as relevant today as it was in 1998: We dare not let this disintegrate into a partisan rhetorical battle.

Senior citizens are going to be Republicans and Democrats and independents. They're going to come from all walks of life, from all income backgrounds, from every region of this country, and therefore, so will their children and their grandchildren. This is an American challenge and we thesis statement for social security and retirement to meet it together.

Any genuine reform has a fiscal and political price, so it's tempting to pretend that the status quo can continue indefinitely. Not acting is itself a choice, and one that will have grim consequences for today's midlife adults and even grimmer ones for their children. What kinds of broad prescriptions for change would be the most effective?

There are just two ways to close Social Security's financing gap without burdening tomorrow's workers and taxpayers: A workable plan should do both.

Download A thesis statement for privatizing social : PDF Epub eBook Fb2 Audiobooks Kindle

Ideally, it should also pay for itself from day one and find savings within the Social Security system through some combination of reduced benefits and new contributions. The bottom line is that the system requires change and this cannot happen without sacrifice in one form or another.

The choice we face is not between guaranteed future benefits under the current system and a risky path of reform. It is between reform options that, in different ways, attempt to ensure the fiscal sustainability of fair and adequate benefits over the long-term. Despite widespread recognition that hard choices are unavoidable, this difficult work is forced to compete for attention with an assortment of arguments for inaction and reform ideas that purport to fix the problem without asking anyone to give up anything.

Here are four of the most frequently used arguments: Social Security can pay full benefits until the year 2042. This argument is true as far as it goes, but it does not tell the full story.

However, trust fund solvency says nothing about fiscal sustainability.

  • Since 1995, productivity has unexpectedly surged;
  • If the choice is to avoid any hike in the Social Security contribution rate, a personal accounts carve out might generate larger benefits than today's pay-as-you-go system can afford;
  • The bottom line is that the system requires change and this cannot happen without sacrifice in one form or another;
  • Privatization of Social Security he comes to know that the high population in prisons is an originator to the prison privatization, and privatizing prisons.

The problem is that the trust funds are primarily an accounting device. Social Security's assets consist of Treasury IOUs that can only be redeemed if Congress raises taxes, cuts other spending, uses surpluses, or borrows from the public.

Thus, their existence, alone, doesn't ease the burden of paying future benefits. It is true that when trust fund surpluses are used to reduce the publicly-held debt it does result in higher savings. But experience has shown that trust fund surpluses are just as likely to be spent as saved.

It therefore cannot be assumed that a trust fund surplus will result in higher savings. Trust fund accounting minimizes the magnitude of the problem because it implies that there really are resources being held in reserve… real assets that can be drawn down in the future to pay benefits.

However, real assets are not created by giving the trust fund an IOU and promising to sell the IOU to the public when the money is needed to pay benefits. The IOUs will no doubt be honored, but that's not the point. The real issue is how the government and society will afford them. The debate over Social Security reform should concentrate more on economic and budgetary consequences than on governmental bookkeeping.

Fiscally, it thesis statement for social security and retirement not the trust fund balance, but the program's operating balance that matters -- that is, the annual difference between its outlays and earmarked tax revenues. Social Security's current operating surplus is due to begin falling thesis statement for social security and retirement 2009 and turn into an operating deficit in 2018.

This deficit is projected to widen indefinitely into the future. A related argument is that a tax hike of merely 1. This claim is based on the program's actuarial balance, which averages projected trust-fund surpluses and trust-fund deficits over the next seventy-five years. In 2004, Social Security's actuarial balance was a shortfall of 1. Proponents of this idea neglect to mention a couple of important caveats. A tax hike of 1. For another, the solution is not permanent. If the combined 12.

If the payroll tax were hiked to cover the subsequent shortfalls, by 2025, it would have to be 14. In other words, it assumes that while we would require the trust funds to be in balance over a full seventy-five years, our children will be satisfied with forty years and our grandchildren will be satisfied with an empty cupboard. And there's a more fundamental problem. Any trust-fund surplus is immediately lent to Treasury, leaving Congress free to spend the money it is supposedly saving.

The Trustees are too pessimistic about the future. Another frequently heard argument is that the Social Security Trustees are too pessimistic--that the projections are unduly gloomy about future economic growth and that with more realistic assumptions the Social Security problem disappears.

  • We also expect to be coping with a labor shortage;
  • To make a difference, however, the funding must be genuine;
  • Including Medicare Part A, the payroll tax cost rate will be 17;
  • Full benefit taxation is therefore already due to be instituted in the future and future revenues from it are already included in current projections;
  • They constitute a claim on future tax revenues, not economic savings that can be drawn down to finance future benefits;
  • Growing our economy could help finance benefits for a mushrooming retiree population.

It is true that the Trustees project that the economy will grow more slowly in the future than it has in the past. But this is a matter of prudence, not pessimism. Economic growth GDP depends, in part, on workforce growth, and this will fall to near zero when the boomers start retiring. Since 1973, the U. Over the next seventy-five years, it is projected to grow by just 0. Given the demographics, it is unlikely that GDP growth will not slow.

A more legitimate question is whether the trustees are too pessimistic about the growth in productivity, or output per worker hour. In the future, the trustees may have to raise their assumption. Since 1995, productivity has unexpectedly surged. But there are reasons to be skeptical: The new-economy thesis remains just that: No one yet knows whether the surge in productivity that began in the mid-1990s will persist. The trustees' current long-term assumption for productivity growth--1.

Even if the enthusiasts are right about the new economy, higher growth is not a long-term fix for Social Security. When productivity goes up, average wages go up, and this adds to long-term tax revenues.

But when average thesis statement for social security and retirement go up, average benefit awards also go up, and this adds to long-term outlays.

  • The Commission's Model One, does nothing more than dedicate 2 percent of the current payroll tax to personal accounts;
  • The pay-as-you-go tax rate will be 17;
  • In 1998, President Clinton made Social Security reform one of his top domestic priorities;
  • If the combined 12;
  • The typical single male retiring in 2040 is due to earn a return of 1.

Practically, the only way to get big savings from higher productivity growth is to sever the link between average wages and new benefit awards. Without such a fundamental change, higher productivity growth alone cannot possibly save Social Security. There is one aspect in which the Trustees are indeed pessimistic--but here greater optimism would obviously add to Social Security's costs. The Trustees project that mortality rates will decline more slowly in the future than they have in the past--and that longevity will therefore grow more slowly.

According to the Trustees, life expectancy at age 65 will grow at just half the pace over the next seventy-five years as it has over the past seventy-five.