Social Security

Social Security is one of the most controversial, yet constructive, programs the United States has ever established. Soon enough, it will reach its 70th year anniversary. During these 70 years, many elderly have benefited from this program through monthly payment. However, this program, due to increasing benefits and beneficiaries, is gradually failing. Social Security, once again, becomes a controversial topic.

Social Security, as its name suggests, is quite Socialist, and that is why when President Roosevelt started this program it was controversial. Classical Economics, which states that the economy will fix itself once contracting, had been the popular theory around that period. Laissez- faire government style is derived from Classical Economics theory. However, during the Depression era, this theory was challenged, and a new theory, Keynesian Economics, became more popular. This new theory suggests that the government should take an active role when the economy is bad. The government should create jobs, which pumps in money into the economy. President Roosevelt created his New Deal program based on Keynesian Economics theory. To finance such operation, the Roosevelt administration started Social Security, which imposed Social Security tax (which we call FICA nowadays) on the people. While the tax was used to finance the New Deal, the people were not having the benefits until they retired.

During the 1950s and 60s the young people in the 1930s retired, and they started using Social Security. The good thing was that the boomers, who were in their 20s, were paying for those who retired; therefore, more people were paying for one retiree. Since then, the government has increased the benefits for the retired. However, because the baby boomers start retiring, less people are supporting one retiree. That is where the problem comes from. In a decade, most of the baby boomers will retire. However, the shrinking workforce might not be able to sustain the increasing cost of Social Security. As of now, the U.S. government still collects enough in Social Security taxes to pay for Social Security. However, by 2018, economists have predicted the Social Security trust fund will be used. Then, by 2042, the trust fund will be totally spent and Social Security will be officially bankrupt.

There are a few emerging solutions to the problem. The first possible solution, or the most famous one, is privatizing Social Security. President Bush, after winning his reelection, is advocating this idea. The idea is that every citizen will be able to divert some of his income toward a private account. He basically invests the money in the stock market, and hopefully by the time he retires the account has enough money. President Bush believes that only by privatizing Social Security the system can be saved. His administration also argues that privatization, in the long run, will give citizens more benefits than Social Security is giving now.
However, critics are not buying this idea. Because of the volatile nature of the stock market, if the bad time comes, many, especially the citizens who are less educated, might not be swift enough to withdraw, thus losing their lifetime saving. Also, the wealthy can invest so much more than the poor and make so much more money. Ultimately, privatization would widen the gap between the rich and poor. Lastly, statistics shows that not many Americans view Social Security as an important issue compared to Medicare or education. Therefore, it is solely the President and the Republicans’ responsibility to capitalize the fear.

The second possible solution is to increase taxes and decrease benefit for the beneficiaries. This has been an idea advocated mainly by academics. The positive is that it is the most economically feasible alternative around. The negative is that it is not politically feasible. The main reason is that the baby boomers are one of the biggest constituencies of the politicians. If the politicians try to bring the idea to the public, the adversary nature of the media toward elected officials can completely jeopardize any politician’s future by sensationalizing the topic. It has become politically unwise to even discuss such recourse. However, this is probably the most logical option one can come up with.

The last possible solution is not to do anything. Many argued that Social Security is not a problem at all; thus, politicians opt not to solve it. In fact, some Democrats, including prominent Senator Edward Kennedy, accuse the administration of creating false fear. Also, the alternatives, such as privatization or increasing tax and decreasing benefits, either require restructuring the system or potentially jeopardizing the politicians’ career. In such situations, politicians would rather pass the problem to the later generation, similar to how our founders pushed the problem of slavery to the future, hoping the problem would solve itself.

I rank the second solution third, the first solution second, and the last solution first. Therefore, I believe not to do anything is the best solution to Social Security.

There are a few reasons why I support not doing anything. First, our country’s political system is famous for deliberation because of checks and balance. In such a political culture, an issue has to gain long-term momentum before the politicians realize that their constituents truly want to solve the problem. However, Social Security does not seem to be an issue that will gain momentum. There have been no major talks in the political arena about Social Security until President Bush brought up such problem and advocated privatization. After the election, the media concentrated on this problem for a few weeks, the time interval famously called the “honey-moon” period for elected presidents. However, after that, the president lost the momentum. Now, the media reports the Pope’s passing, the British royal marriage, etc. If the President does not have a Social Security bill passed by the mid-term election, he will be a “lame-duck” and can accomplish little. Tragically for the President, since the media begins to neglect Social Security, there is a high chance of political failure for his plan.

Second, a package of increased tax and decreased benefits is not politically attractive. Once there is benefit, no one wants to give it away. Increasing tax would anger those who are in workforce; decreasing benefits would anger those who are retired and going to retire. Even though this plan should be the most logical solution, it takes so much political courage to even advocate such idea. Because no politician wants to be thrown out of office, the plan dies even before it is discussed.

Therefore, the third solution is the most feasible solution both economically and politically. Because the American political system is famous for its deliberation, many ideas arise but no many are actually discussed. If Social Security is truly a problem, a few years later when most of the boomers retire, the politicians will know that it needs to be solved. Now, the idea is still at its infancy politically. Also, economists believe that the trust fund will not be used till 2018, and the trust fund will not be spent until 2042. By then, I will be 55 years old, not 17 anymore. And by 2042, most boomers will have passed away. The number of beneficiaries will decrease. In addition, economists’ predications are usually pessimistic. During the 90s, before the economy was expanding, economists predicted that the trust fund would be spent by 2029. Gradually, the economists changed their predictions, or assumptions, as the economy improved. Since 2001, the U.S. has been in an economic depression. Therefore, it is reasonable to think that once the economy gets better, the economists will change their prediction again. Hopefully, the prediction is not 2042 anymore but sometime later. Our fear is that the boomers will consume most of the trust fund. However, they cannot consume anymore once they pass away. And optimistically speaking, by 2042, many conscientious citizens will have pensions or retirement funds that they do not have to depend solely on Social Security for income after they retire.

Social Security has been working for the past 70 years. Many people benefit from such Socialist problem. There is a saying, “If it ain’t broke, don’t fix it.” The Social Security is alive and working. Therefore, the government should focus on problems that are more urgent and serious.