Social Security and Demographics

Much has been made about potential threats to the Social Security System in the United States today, and the primary threat is seen as deriving from demographic realities. The intent of the system from the beginning was for each generation to provide for the previous generation through a form of taxation so that the system would pay for itself as it operates. Some believe that they pay in money which is returned to them when they retire, but in fact what they pay in now is paid to those who are currently retired. The baby boom after World War II produced the first generation that was much larger than the one that would follow so that the system is now under strain and will have to be paid for by future generations rather than the one currently working. This suggests that the system needs drastic reform, and a number of proposals to do so have been made.

The 1935 Social Security Act was intended to create a system under which workers would receive at least as much in benefits as they had contributed, a goal that was considered crucial to public acceptance of a compulsory program. In a social insurance plan, however, where universal and compulsory protection is the goal, individual equity may be de-emphasized in favor of social adequacy, meaning a standard of living below which it is felt no one should fall. The 1939 amendments to the Social Security Act tried to resolve certain issues because the needs of millions of the elderly were not being met by the

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proposals offered to correct the deficiencies of the Social Security system can be characterized as follows: 1) Raise taxes, 2) Decrease benefits, 3) Invest portions of the Security Trust Fund in the stock market, and 4) Allow individuals to invest in their own social security accounts. There is no certainty that any change will be made, of course, and for a long time the popularity of the program has been cited as Social Security has been called the "third rail" of American politics, meaning something politicians dare not touch. However, the issue has become more grave so that pressure is increasing for leadership to effect a worthwhile change: "The ritual deliberation about keeping Social Security in the black has occasioned a larger argument about whether Social Security will continue to be anything like Social Security" (Chait, 1999). This suggests that the question is "not how much of a pension the government should guarantee its citizens, but whether such a guarantee should exist at all. It is ultimately not a technical question but a moral and political one" (Chait, 1999). RAISE TAXES Congress has already tried to shore up social Security with a tax raise. Congress was faced with the projected bankruptcy of t

Category: Government - S