Industrial Revolution and Social Security

Industrial Revolution and cordial credentials departmentStrengthen sociable auspicesUp until the Industrial Revolution, economic valueive cover for most heap was maintained by working until old mount up and then being taken c ar of by ones children and family members. This type of economic disbelief drastically changed when President Roosevelt pushed for and signed into law the affectionate Security Act of 1935. During the ceremony for well-disposed Security Acts signing, President Roosevelt stated that it is a law that will take care of human needs and at the same time provide for the United States an economic structure of vastly greater soundness (Roosevelt, 1935). Roosevelt excessively states in his speech that while the program is not a safeguard against all economic problems in our future, we do need it to protect our citizens who are or would be unable to work. Since President Roosevelt passed the affectionate Security Act, there has been much debate in regenerate ing Social Security with many desire privatization of the program. This paper aims to show why we should not privatize Social Security exactly, rather, search for alternative means to strengthen it. We need to strengthen Social Security because it has and still protects future avails against inflation, has proven to reduce poverty for our elderly, and is efficiently and soundly administered.Social Security appears quite uniform to an employer-sponsored pension plan on the surface, exclusively they are intrinsicly different. The program calls for individuals to put part of their income aside in the form of a payroll tax while working in which they would ascertain monthly payments upon removement. Balancing equity and adequacy is the primary benefit of Social Security. Equity allows plenty to receive more of what they put into Social Security. Hence, people with higher(prenominal) incomes would also put more into the program and also receive more benefits upon sequesterment. The Social Security plan, under the system of adequacy, dismisses periods of low income such as when a worker becomes disabled or unemployed. Instead, it uses an affixd ratio of income for the poor than the wealthy. In addition, Social Security benefits are indexed against uncertainties regarding length of life and inflation and has proven to be Americas most beneficial program against poverty (Goda, 2011, pg.1).If we privatize Social Security, we would surely erode the basis of ensuring a sufficient base income for people whove struggled their whole lives. Low-income workers would not be able to make enough money to invest into their accounts in order to maintain their standard living for when they choose to retire (Heiger, 1997). Also at a larger risk to poverty during their old age are the people in the middle-class. They would not get equal returns because of the inherent nature of the financial markets, and those who receive negative returns would not be able to survive from other sources (Heiger, 1997). The financial markets fluctuate up and down, and some people would retire with meager returns during long economic downturns such as the Great Recession of 2009. For those who live to be very old, some well into their 80s and 90s, they would just outlive their investings. For example, if they dumped their savings into investment vehicles such as annuities during their retirement, those investments would be greatly reduced by inflation the longer they live.Before Social Security, the highest range of poverty were in the elderly age group. People dont realize these days that the program had reduced the poverty of elderly Americans from 35 percent to about 10 percent (National, 2012). This percentage falls under the 12 percent value of the American population (Poverty, 2013). Social Security provides for the potentially destitute millions of American elderly, who are no longer able to work and in retirement, the financial stability they need to sustain t heir lives. Since the elderly do not involve to depend on their working children, Social Security also provides an indirect benefit to their off springs. There are two other benefits in which Social Security provides to people under age 65. The first benefit is income during long-term disability and income for a workers dependents who die before their retirement (ProCon.org, 2014). This type of benefit also doesnt carry the stigma of similar programs such as welfare.For middle-class workers that have employer-sponsored retirement programs, Social Security was never meant be a preposterous source of income during retirement. Social Securitys value is clear when looking at it as a means of income of a retirement investment group. The benefits from Social Security maintain their worth since they are adjusted for the annual cost-of-living while other types of investment assets get eaten away and used up as a person becomes older into retirement. In addition, workers will come to acqui re greater individual risks as companies continue to move away from pensions towards 401(k) plans and other types of programs with unreliable payouts (Cammack, 2012). Against that backdrop, the Social Security program carries much more protection against the sway of the economic markets.To denationalize Social Security would be to allow Americans the choice to withhold a small percentage of their pay as an investing into individual accounts, keyword being choice. So what is wrong with giving workers the choice to opt-in or not? This type of reform brings with it steep reductions for the younger workers who elect to stay in the program (Heiger, 1997). Wealthy individuals and workers who have higher incomes would not want to participate in the program but rather choose the market-based system (Heiger, 1997). While it may appear to be a choice, privatizing Social Security would make it such a bad investment for high-income people. They would just all bail out, so they dont have to inve st their earnings to balance the pool for the low-income workers retirement pensions (Heiger, 1997). In essence, without universal participation, the financially less-well off would be left to fend for themselves (Heiger, 1997). There would be a gaping hole of future benefits for low income funders who choose to remain in the program, and this would wholly defeat the purpose of the program and eventually dissolve it.The participation of individuals from all income brackets is the reason Social Security works and is sustainable. The program will be similar to welfare if the wealthy and high-income individuals choose to not participate. The participation of individuals from all age groups is another reason Social Security (Rose, 1990). For years now, the retirees of the program were paid by the taxes from workers which is the entire the basis of Social Security. Those workers would, in turn, be paid by the taxes in the next generation of workers for their Social Security retirement b enefits. However, in 1983, an increase in age limit for benefits eligibility in addition to payroll taxes being increased were amended to the Social Security Act (Social, 2014). The tax increase brought in surplus money, more than the amount needed to maintain the Social Security benefits at the time. The purpose of the increase was to have the Boomers prepay part of their old age benefits (Johnston, 2012, pp. 10).The extra money generated from the increased taxes were also used to pay off federal debt and purchase Treasury bonds (Johnston, 2012, pp 10). Essential, the government was lending itself money. This act generated controversy among proponents of Social Security privatization yet it is the same as workers using the money to buy the bonds themselves. The government is required to pay back what it owes and in this case, Social Security is nigh risk-free because it is backed by the full faith and credit of the government (Heiger, 1997). In the end, this principally articulate s that the programs future recipients need the taxes of the workers who come later them to keep the Social Security benefits ongoing.Since its inception, many people such as former Kansas Governor Alf Landon had outspoken views against Social Security (Landon, 1936). Landon and critics of Social Security have argued that the program is a fraud and that the overhead costs are too high to sustain the program. However, the program itself has only seen reductions in administrative expenses year after year and as of 2013 accounted for only 0.7% of the funds total expenditures (Kunkel, 2013). This percentage is still below the costs of the average 401(k) fees of 0.72% per year, with highs close to 2% per year, charged by plan administrators (Deloitte, 2009). With such a low overhead cost over private plan administration, the government clearly shows how efficiently it administers the Social Security program.Social Security has definitely provided Americans protection against destitution with adequate supplemental income and allowed people who have worked their entire lives to maintain their standard of living during retirement. While Social Security has undergone many reforms and continues to need improvement, privatization is not the key. In its proven history of increasing efficient, decreasing the poverty of our elderly, and hedging benefits against inflation, Social Security must continue to be strengthened with centralized government policies and administration. To privatize Social Security, to fundamentally take it away from the whole of our nations people, would be unconstitutional.Works CitedCammack, R. (2012, January 5). From defined benefit to defined contribution a systematic approach to transitioning retirement plans. Retrieved October 1, 2014, from http//www.shrm.org/hrdisciplines/benefits/articles/pages/transitioningplans.aspxDeloitte. (2009). Inside the Structure of delimitate Contribution / 401(k) Plan Fees A Study Assessing the Mechanics of What D rives the All-In Fee. Defined Contribution/401(k) Fee Study. Retrieved October 1, 2014, from http//www.ici.org/pdf/rpt_09_dc_401k_fee_study.pdfGoda, G. S., Shoven, J. B., Slavov, S. N. (2011). HOW WELL ARE SOCIAL SECURITY RECIPIENTS PROTECTED FROM INFLATION?National Tax Journal,64(2), 429-449. Retrieved October 1, 2014 from http//ezproxy.snhu.edu/login?url=http//search.proquest.com/docview/871907293?accountid=3783Heiger, M., Shipman, W. (1997, July 22). Common objections to a market-based social security system A response. Retrieved October 1, 2014, from http//www.cato.org/pubs/ssps/ssp10.htmlJohnston, D. C. (2012, May 12). Social Security is not going broke. Retrieved October 1, 2014, from http//blogs.reuters.com/david-cay-johnston/2012/05/04/social-security-is-not-going-broke/Works CitedKennedy, D. M. (2010). A NEW DEAL COMPROMISED.American Heritage,60(2), 26-28.Kunkel, S. (2013, January 28). Social Security Administrative Expenses. Retrieved October 1, 2014, from http//www.ssa. gov/oact/STATS/admin.htmlLandon, A. M. (1936). I Will Not Promise the Moon ECONOMIC SECURITY, ADMINISTRATION BILL, REPUBLICAN PROPOSAL.Vital languagees Of The Day,3(1), 26.Poverty. (2013). InThe encyclopedia of elder care The comprehensive resource on geriatric health and social care. Retrieved October 1, 2014 from http//ezproxy.snhu.edu/login?qurl=http//search.credoreference.com.ezproxy.snhu.edu/content/entry/spenelderc/poverty/0ProCon.org, Social Security. (2013, September 12). Privatizing Social Security Pros and Cons Press release. Retrieved October 1, 2014, from http//socialsecurity.procon.org/BackgroundRoosevelt, F. D. (Writer). (1935, August 14). FDR Social Security Act Speech Television broadcast. In FDR Social Security Act Speech. Retrieved October 1, 2014, from https//archive.org/details/fdrbigRose, N. E. (1989). Work relief in the 1930s and the origins of the social security act.Social Service Review,63(1), 63. Retrieved from http//ezproxy.snhu.edu/login?url=http//searc h.proquest.com/docview/1290931445?accountid=3783Works CitedSocial Security (United States). (2014, October 1). In Wikipedia, The Free Encyclopedia. Retrieved 1028, October 1, 2014, from http//en.wikipedia.org/w/index.php?title=Social_Security_(United_States)oldid=629217299