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Essay by:Lezley Lawson
Emporia State University
We face so many fiscal challenges that we cannot solve all of our problems with one simple solution. One of the larger factors in America’s growing debt crisis is the cost of Social Security. The flux of babies born after World War II became known as the “baby boomers”. With the retirement of these “baby boomers”, the cost of Social Security will be higher than ever. The only way to find a solution to this problem is to figure out why Social Security has become so costly, then solutions can be found to reverse the debt that will be caused by Social Security; this will allow us to reduce our nation’s growing deficits and national debt.
Taxes were first collected and redistributed as Social Security in 1937 to help stimulate the economy during the Depression. Social Security benefits also served as an incentive for older workers to retire and allow younger workers to get jobs. With the challenges of the Great Depression, this made sense back then. Monthly distribution started in 1940. Understandably, the first people to receive Social Security had paid virtually nothing into the fund. From the very beginning, younger generations paid for older generations to have Social Security. Now there is a never-ending expectation to have Social Security benefits. This explains why the “baby boomers” have had such an impact on the success of Social Security as they worked and paid into the fund and why they are now its problem. A vast number of people will be leaving the labor force and their retirement will create higher costs for Social Security. The big question now is how the younger generations will fund this growing cost of Social Security.
The most obvious solution is to raise payroll taxes. With more money coming in, increased Social Security payouts will not have as large of an impact on our nation’s rising debt. The problem with this solution, however, is that Americans seem unwilling to pay higher taxes. This type of tax increase might ensure Social Security will be in place when younger workers, who will fund the current program, reach retirement age. It is easy to say we want a solution, but more challenging to convince Americans of a solution when the rewards are not immediate, especially when it involves a tax increase.
Extending the retirement age even further is another possible solution. If every person in the labor force paid into the Social Security fund a few more years and received Social Security benefits a few years less, then the deficit could slowly be reduced. Aspects of this solution are already being implemented, but not enough to continue the current program. If we wait too long, will the government have to push back the retirement age so far that, in time, there will be no retirement age, and people will simply work until they die? Older workers currently in the labor force have expectations to retire at a certain age and we can expect them to defend the current system. This leaves younger people in the prime generations to have extended retirement ages or face much higher taxes later. This solution may be the easiest for the government to implement because many young individuals do not think about their retirement. Many are anxious to earn income, have big dreams of making millions, and do not stay informed on current issues like national debt. We trust our government.
According to the Social Security and Medicare Boards of Trustees 2009 Summary, “Social Security could be brought into actuarial balance over the next 75 years with changes equivalent to an immediate 16 percent increase in the payroll tax (from a rate of 12.4 percent to 14.4 percent) or an immediate reduction in benefits of 13 percent or some combination of the two.” Another solution would be to review and revise who will be eligible for Social Security changing it to be based on need to some extent. Social Security has developed into income most individuals expect when they retire. Although it covers more, staying focused on retirement is an important first step. Many individuals pay into Social Security and no other retirement plan. Funds have already been spent on current retirees with the understanding that other people’s money will be spent on current members of the labor force when (or if) they retire. Should Social Security be further revised into a partial pay to existing retirees and a partial insurance investment program for the individual paying into the program? Would this increase the commitment to the success of Social Security? Would people be willing to pay more into Social Security if they knew they would ‘definitely’ benefit?
It is imperative that young adults become aware, get involved, stay informed, and vote. Individuals receiving Social Security tend to vote. They want greater Social Security benefits without raising taxes. However, it does not work that way. Collectively, we do not get something for nothing. Social Security is only one issue affecting national debt. To reverse this debt, each and every issue must be confronted individually and aggressively as if it were the only issue of any importance. Reducing the parts will reduce the whole. Social Security is beneficial and necessary for many people; however, changes are inevitable if the program is to survive. If long-term solutions continue to be avoided, the alternatives may become untenable, and dissolving the Social Security program does not have to be where we are headed. Whether it is going to the moon or charting a new fiscal path, solutions can be found to reverse the debt that will be caused by Social Security. Let us resolve to stop shifting the burden by seeking long-term solutions to all aspects of our deficits and debt.
Works Cited: A Summary of the 2009 Annual Reports: Social Security and Medicare Boards of Trustees
»A new report finds the main problem in getting the public to deal with our fiscal problems isn't opposition to tax increases or spending cuts -- it's their lack of trust in the government to spend their money wisely.