Kenneth Philpot

Econ 2020
04/25/2016
Social Security Solvency and Reform
The topic of Social Security going bankrupt is an issue that has been addressed by both
sides of the political spectrum, and one that is dividing people on party lines. The republican
view on reform for Social Security states that, While no changes should adversely affect any
current or near-retiree, comprehensive reform should address our societys remarkable medical
advances in longevity and allow younger workers the option of creating their own personal
investment accounts as supplements to the system (www.GOP.com). A Republican solution to
fixing Social Security is to allow younger generations to opt out of it and do their own savings
plan for retirement. Some Republicans have called for a complete privatization of Social
Security, such as Mitt Romney. He has been quoted in numerous instances ranging from 20072011 giving his favor for privatization. Rick Perry, while running for President in 2012, was
called out by Romney during the Primaries for having called Social Security a Ponzi Scheme.
It appears to be clear that the establishment Republicans, such as Rick Perry, do not like
Social Security and want desperately to make that money private and available for them to
gamble on the stock market. During the 2008 financial meltdown of our economy, where many
lost their homes, jobs, and entire life savings, it is absurd that people would want our Social
Security to have been wrapped up in that mess. The amount of wealth that vanished during the
crash wouldve devastated the entire savings in the Social Security fund.
It is important to keep in mind that most laws regarding income brackets were set in the
time of the New Deal and very little amount of change has been made to help those who are poor

or in the middle class. With inflation, an income of $30,000 today is not that much, if it were the
80s it would be a different story. The fact that someone who makes a million dollars, a billion,
or only $118,000 will pay the same amount into Social Security is a cause for concern. Someone
making $250,000 today, with a decent size family and bills to worry about, should not be paying
the same amount in taxes (both Federal, percentage wise, and Social Security, dollar amount) as
someone in a much different situation. Modern Democrats have proposed lifting the cap in order
to provide additional funding to make up for some of the inflation. Because inflation has risen so
quickly the Social Security fund has to continuously raise the cost of living to ease the burdens
of a small fixed income. With more and more money being paid out, the well is running dry as a
result. This will cause a need for dramatic overhaul
Another idea that has been suggested from Republicans is to raise the retirement age for
individuals born after a certain date, which I believe would beneficial. Social Security has been
available to those who are sixty-five and older since its origination, however, our standard of
living and medical technology have dramatically increased since then, which has enabled people
to live much longer lives. According to the Social Security Administrations website, The Social
Security Act was signed by FDR on August 14,1935 and regular payments started in the 1940s.
Life expectancy for those born in 1930 was a mere 58 years for men and 62 years for women and
access to retirement wasnt possible until age 65. This means that most people never got their
money back, and those who did were at such a late age that they were accessing the funds for a
limited amount of time (ssa.gov). According to the Huffington Post, U.S. life expectancy for
babies born in 2011 was 78.7 years. Therefore, if Social Security were to have been designed to
rise the age requirement each generation when more advancements in medicine had been
achieved we wouldnt be giving people Social Security benefits until they were approximately

80. With many people currently reaching their eighties before their quality of life diminishes,
they are actually receiving hundreds of times more payments than previous generations. If we
were to continue at this rate and begin reasonably living to be 120 years old, Social Security will
be granted to people in the middle of their life cycle, at a time when they are perfectly capable of
working. Regardless, we are headed toward a completely insolvent situation. Democrats do not
want to raise the age of retirement at all and that is extremely damaging to the conversation of
how to fix the issue, because they will not budge and are standing on a principle of an age
decided 75 years ago, people today are extremely concerned with what will happen when they
retire.
The last recommendation for solvency would be to pass legislation banning the
government from ever taking money out (borrowing money) of Social Security again. After all,
good portion of our Multi-Trillion-dollar deficit is money that is owed from the Federal
Government back to the Social Security fund. With this in perspective, it is no wonder why
Republicans want Social Security to be privatized because then the government wont have to
pay back the money. The American people would who need Social Security the most would be
out of luck because that money would be gone for good. Democrats are involved in this as well,
being that they have spent just as recklessly as Republicans in Congress. It seems unavoidable
because of the games that are played in Washington- because we are either blue or red and if
youre blue and Im red, we simply cant agree. We just continue avoiding the elephant in the
room (no pun intended); we continue to skirt around the issue by arguing about it. If congress
does not take a serious look at their priorities and start to work together to formulate a better plan
as a unit.

With these three solutions presented, I feel that it is possible to solve the current issues
with Social Security and ensure that it will be there for those who need it most, as well as those
who simply want to have a solid retirement to look forward to. When Social Security was
implemented the rate of poverty was very high for those who were of retirement age. Because of
Social Security and private retirement many people have been lifted out of poverty. We need to
continue this in America and ensure these promises that were made will be kept. As far as an
overall Macroeconomic scale goes for this policy, it truly does affect confidence in consumers in
the economy. If everyone truly saved as much as they needed for retirement and didnt just spend
in the economy our largest sector, the service industry, would be sharply affected. Many people
simply lack the knowledge or ability to properly save for themselves and Social Security
certainly helps those individuals later in their lives. I believe that with a strong Social Security
package available to those citizens that spend their lives building up the economy, our country
and economy will be much stronger as a whole.

Works Cited

WWW.GOP.com
SSA.gov
Huffington Post http://www.huffingtonpost.com/news/social-security-benefits/