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CAS 138T
1 April 2015
There is no denying that the United States and its citizens have a responsibility to provide
those who are unable to work with a certain level of income to maintain a normal lifestyle, free
from poverty. With the exception of very few, all legal citizens of the United States will receive
social security in the form of a monthly check at some point in their lifetime. Furthermore,
almost all workersabout 96% help to fund social security through a payroll tax, which is a
6.2% tax on all income of workers under $117,000.1 The taxes collected are, then, immediately
paid to the beneficiaries of the program. When the amount of revenue collected from taxes
exceeds the amount needed to pay benefits, the surplus is put into the Social Security Trust Fund,
which invests the funds into United States Treasury securities that accumulate interest. The
balance of the trust fund, about $2.8 trillion, is the amount owed to Social Security by the United
States Treasury. 2
The program helps provide a much needed service to the elderly and disabled.
Furthermore, Social Security does an excellent job at ensuring financial security for those, who
cannot work. From 2007 to 2010, the time period containing the Great Recession, the average
income of people in every age group dropped except for those 65 and older, for whom the
average income grew by 5.5 percent.3 This may seem unfair; however, it is exactly the sort of
financial stability that those, who cannot work, need in the time of a financial crisis.
Furthermore, the system does an effective job at providing financial stability for even the poor.
Social Security helps to alleviate financial pressure by providing retired workers with a monthly
check that is roughly proportionate to what they paid into Social Security. However, the program
also protects retired workers from the fluctuation of the market by forgiving periods of low
income or unemployment and further protects the poorer retired workers by providing them with
a larger overall portion of the revenue than the rich.4 This equitable method of redistributing
funds along with the protection of funds from inflation makes Social Security an extremely
While it is obvious that the outcomes of Social Security effectively provides a excellent
safety net for retirees, the process by which the program accomplishes its goals endanger the
programs very existence. The process by which the current workforce offers a portion of its
income to the elderly in exchange for the same treatment upon their retirement works only as
long as the amount of money paid into Social Security by the workforce exceeds the amount of
money necessary to provide retired workers with their benefits. When the amount of revenue
generated by Social Security falls short of the amount of money necessary to provide benefits to
the retired population, the only solution is to use money from the trust fund reserves to pay the
beneficiaries of Social Security.5,6 Furthermore, Social Security is unique in that it, along with
Hospital Insurance Trust Fund and Medicare, can only provide benefits using the resources
available to it through the trust fund. In other words, unlike almost any other government
program, Social Security cannot run a budget deficit.7 Therefore, if Social Security depletes the
trust fund by continually using it to cover the difference between payroll taxes collected and
benefit payments, the program will not be able to provide all retired workers with benefits or will
This is exactly the problem that Social Security in the United States is faced with today.
Historically the United States Social Security program has run a surplus; however, beginning in
2010, the program has needed to begin taking money out of the trust fund. From 2014 to 2018,
the Social Security Trustees estimate that the average deficit will amount to about $77 billion,
only a small portion of the amount available in the trust fund, before rising dramatically.8 While,
since 2010, the interest on the assets kept in the trust fund have exceeded the amount of the
deficit, by 2019 it will be necessary to use trust funds to offset the deficit.9 Furthermore, as the
baby boom generation has begun to retire, the number of workers per retiree has gone down.
This will only increase the gap between the revenue generated from payroll taxes and the amount
necessary to pay benefits to retirees. Furthermore, as technology advances, the life expectancy of
the elderly continues to increase. Increasing life expectancy will make it necessary for people to
collect benefits for a longer period of time and further deplete the trust fund.10
Social Security is expected to continue to provide full benefits until 2033, when it is
projected that the trust fund will become exhausted. At this point without the assistance of the
trust fund to cover the deficit, revenue generate by payroll taxes is expected to cover only about
76 percent of the deserved benefits.11 The graph below demonstrates that, while in the past the
payroll tax was enough to cover the benefits of all beneficiaries, the Trust Fund is expected to
run out. The increasingly pessimistic projections also indicate that the problem has only become
than 50 million people who collect social security would experience an uncertain future or
being depleted by 2033. For example, one obvious change would be to increase the payroll tax
that is used to pay the benefits of disabled or retired workers. If the payroll tax were raised by
just 1 percent by the year 2036, it would eliminate more than half of the deficit run by social
security.14 It could be argued that raising taxes is difficult and politicians are often reluctant to do
so. However, in a survey conducted by Mathew Greenwald and the National Academy of Social
Insurance, about 69 percent of Americans stated that they would be willing to raise their own
payroll taxes by 1 percent.15 Therefore, evidence suggests that it would not be entirely
controversial for a politician, worried about his constituents or even reelection, to vote in favor
Security trust fund would be to eliminate the income cap on the payroll tax. As was previously
stated, high income earners are not taxed on any amount that they earn above $117,000. This
means that only 82.5 percent of all earnings are taxed by Social Security.16 However, if the cap
were slowly eliminated by the year 2022, it would reduce the deficit by 71 percent.17 It is very
unlikely, though, that Congress would be able to pass a proposal that would completely eliminate
a tax cap on the rich without offering them anything in return. Taking this into account, if the cap
was increased to cover 90 percent of all earnings and benefits were increased for high earners in
return, the deficit would be reduced by 20 percent by 2033.18 Another survey conducted by the
National Academy of Social Insurance showed that 68 percent of Americans supported a plan to
One step that has already been taken to help assuage pressure put on social security by
the prospect of exhausting its trust fund is raising the retirement age. Action was taken in 1983 to
gradually raise the retirement age from 65 to 67, but the age will not be fully raised to 67 until
the year 2027.20 The reason for such a slow increase is the work of political maneuvering to
avoid provoking the AARP, one of the most powerful lobbying groups in the United States. The
AARP spent $241,342,064 on lobbying from 1998 to 2014 and is extremely effective at acting
on behalf of retired workers.21 The very gradual increase assures that the benefits of many people
will remain the same. By increasing the retirement age gradually and over a long period of time,
politicians can avoid angering their older constituents and reform social security without being
employ the same tactics to raise the retirement age to 75 by the year 2050, then the Social
Security deficit could be reduced by 25 percent by reducing the amount of money necessary to
If these steps are taken to reform Social Security, they could reduce the increasing deficit,
which threatens to deplete the trust fund by the year 2033. When the deficit is reduced, the trust
fund can remain an asset for many years after. Then, retired or disabled workers could continue
to receive the same financial security that retired workers have historically enjoyed. As
previously mentioned, Social Security does an excellent job of providing a steady and stable
source of income, resistant to economic downturn, for senior citizens and disabled workers. The
program also is one of the most effective anti-poverty programs in the United States. Therefore,
The consequences of a failure to act on this issue could be very serious. Without reforms
that create a way to continue to fund social security, retired workers could be forced to provide
themselves with their own form of private social security. Without a system in place to reallocate
resources to the poor, it would be unlikely that low income workers would be able to save
enough money to provide an adequate life for themselves and their families after retirement.
Furthermore, without a program in place that guarantees a decent standard of living, those who
lack the financial savvy to competently manage their accounts could be left without enough
money on which to live in their old age. This implies that not only could poorer workers be put at
an increased risk, but also the middle class could potentially be subjected to poverty in old age.
Furthermore, given the steadily rising life expectancy, retirees, who live into very old age, would
be at a notable risk of depleting their personal savings as it is impossible to predict how much to
save without knowing how old they will live to be. Workers would also be at an increased risk of
suffering from economic downturn after their retirement without a constant stream of income
Since Social Security is a government run program, any action to reform the program
must be taken by Congress. However, despite the urgency of this issue and several proposed
plans for reform, very little action has been taken by Congress to change Social Security since
1983. Reforming Social Security is a very delicate political issue because most seniors enjoy
their current benefits and have no interest in reforming a program that provides them with a
comfortable income.
Youths are significantly less politically active than the older population. Retired people
are by far the most politically active demographic. Therefore, they are much more influential on
policy than are youths. This makes it difficult to reform social security because retired workers
obviously would be in favor of neither cutting benefits nor raising the retirement age. This also
gives policy makers very limited options in what they can do to change the current state of Social
Security. It is, therefore, crucial for a younger audience to become more politically aware and
begin to take action to gain influence on policy. Young people vote at much lower rates than do
the elderly. The graph below not only demonstrates the very low rates at which young people
vote and the very high rates at which the elderly vote, but also the decreasing rate at which
young people vote and the increasing rate at which the elderly vote.
24
Policy makers, then, are less concerned with the attitudes of the younger population.
However, if younger age groups voted with higher frequency or became involved in other ways,
they could more effectively exert their influence and work to reform social security. The
indifference of the youths of America towards politics could prove to have major consequences
for the future of Social Security. It is imperative for the younger population to show concern and
take responsibility for the future of the country to push reform on this important issue higher up
Endnotes
1. Kessler, Glenn. "Social Security: A Guide to Critical Questions." Washington Post. The
Washington Post, n.d. Web. 8 Jan. 2014.
2. Ibid
3. Kurtzleben, Dannielle. "5 Ways To Reform Social Security." US News. U.S.News &
World Report, 15 Sept. 2011. Web. 10 Apr. 2015.
4. Starr, Paul. "Why We Need Social Security." Princeton University. The American
Prospect, Feb. 2005. Web. 10 Apr. 2015.
5. Kessler, Glenn. "Social Security: A Guide to Critical Questions." Washington Post. The
Washington Post, n.d. Web. 8 Jan. 2014.
6. Goss, Stephen C. "The Future Financial Status of the Social Security Program." The
Future Financial Status of the Social Security Program. U.S. Social Security Administration, 3
Nov. 2010. Web. 10 Apr. 2015.
7. Ibid
8. Lew, Jacob J., Thomas E. Perez, Sylvia M. Burwell, Carolyn W. Colvin, Charles P.
Blahous, III, and Robert D. Reischauer. "Social Security." Trustees Report Summary. Office of
Social Security, 28 July 2014. Web. 10 Apr. 2015.
9. Ibid
10. Kessler, Glenn. "Social Security: A Guide to Critical Questions." Washington Post. The
Washington Post, n.d. Web. 8 Jan. 2014.
11. Goss, Stephen C. "The Future Financial Status of the Social Security Program." The
Future Financial Status of the Social Security Program. U.S. Social Security Administration, 3
Nov. 2010. Web. 10 Apr. 2015.
12. De Rugy, Veronique. Social Security Trust Fund Exhausting Faster Than Expected.
Digital image. BillMoyers.com. Mercatus Center at George Mason University, 16 Aug. 2013.
Web. 10 Apr. 2015.
13. Kessler, Glenn. "Social Security: A Guide to Critical Questions." Washington Post. The
Washington Post, n.d. Web. 8 Jan. 2014.
14. Klein, Rebecca. "5 Ways To Fix Social Security." The Huffington Post.
TheHuffingtonPost.com, 8 Feb. 2013. Web. 10 Apr. 2015.
15. Ibid
16. Hamilton, Martha M. "How You Would Fix Social Security: Tax Higher Earnings."
Washington Post. The Washington Post, 27 Oct. 2014. Web. 10 Apr. 2015.
17. Klein, Rebecca. "5 Ways To Fix Social Security." The Huffington Post.
TheHuffingtonPost.com, 8 Feb. 2013. Web. 10 Apr. 2015.
18. Hamilton, Martha M. "How You Would Fix Social Security: Tax Higher Earnings."
Washington Post. The Washington Post, 27 Oct. 2014. Web. 10 Apr. 2015.
19. Klein, Rebecca. "5 Ways To Fix Social Security." The Huffington Post.
TheHuffingtonPost.com, 8 Feb. 2013. Web. 10 Apr. 2015.
20. Hamilton, Martha M. "How You Would Fix Social Security: Raise the Retirement Age."
Washington Post. The Washington Post, 28 Oct. 2014. Web. 10 Apr. 2015.
21. "Lobbying." Opensecrets RSS. Center For Responsive Politics, n.d. Web. 10 Apr. 2015.
22. Klein, Rebecca. "5 Ways To Fix Social Security." The Huffington Post.
TheHuffingtonPost.com, 8 Feb. 2013. Web. 10 Apr. 2015.
23. Starr, Paul. "Why We Need Social Security." Princeton University. The American
Prospect, Feb. 2005. Web. 10 Apr. 2015.
24. File, Thom. 2013. Young-Adult Voting: An Analysis of Presidential Elections, 1964
2012. Current Population Survey Reports, P20- 572. U.S. Census Bureau, Washington, DC.