Social Security IT's Been More Term Paper

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Social Security can be an effective tool in public personnel administration and can benefit common American a great deal if used effectively. Therefore it is imperative to look into the future prospects of the programs and remove loopholes and bottlenecks in its future implementation.

Future

Under the Social Security plan government is collecting more money today then it is paying out as benefits to citizens. The surplus money remains safe in trust fund. However, the future situation seems troublesome due to various issues and reasons. "Social Security gradually expanded from its inception through the early 1980s by increasing benefits and coverage for various groups. To pay for those modifications, payroll tax rates and the maximum earnings ceiling have been steadily raised. Now the Social Security trust funds are in long-term financial imbalance, and benefit cuts and more payroll tax rate increases seem inevitable if Americans are to retain the important social protections that Social Security currently offers" (Tanner, 2004)

Issue of Demographics: The fundamental issue is one of demographics. As an intergenerational transfer of money from those who are working to those who are retired, there must be enough people employed to provide sufficient benefits. The large baby boom generation will be retiring after the turn of the century, when the numbers in the workforce will be declining. In 1950, there were 16 workers for each individual receiving benefit. Today, there are just over three. By the end of the second decade of the 21st century, when the baby boomers are into retirement, there will be two workers for each recipient.

In fact the demographics of the Baby Boom have very little to do with the long-range problems of Social Security. The main reason the fund will run into deficits in future years is that people are living longer. If people continue to retire at the same age but live longer, then a larger percentage of their lives will be spent in retirement. If people want to spend a larger portion of their lives in retirement, either they will have to accept lower incomes (reduced benefits) in their retirement years relative to those of their working years, or they will have to increase the portion of their incomes (higher taxes) that they put aside during their working years for retirement. These are the issues that are currently being debated to reform the Social Security program in order to make it useful and effective for future generations to come.

Options for Future

There are different options and choices suggested for the policy makers to address the future needs of the Social Security program.

Reduction in Benefits: Some people suggest that the benefits given to the citizens should be curtailed in order to sustain the future needs. Some also suggest increasing the retirement age further as Americans are living longer and healthier. Critics on the other hand argue that increasing the retirement age would not work as most elderly will not be able to work beyond the current retirement age and some people are still opting to retire early.

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Increasing the Taxes: For some people the solution of the problem lies in increasing the current tax rates for Social Security program so that future needs can be met easily. Again, critics argue that current tax rates can be considered highest as they have been raised many times over the years and increasing them further will cause more problems in terms of public personnel administration.

Privatizing Social Security: Many consider privatizing social security as a viable option like many other features like correctional facilities were privatized. However, critics argue that privatizing Social Security would not create a penny of additional savings. All the privatization plans call for the government to continue to pay Social Security benefits to current recipients and those about to retire; therefore spending would be exactly the same after privatization as it was before privatization. Yet the government would no longer be collecting Social Security taxes. Each dollar an individual puts into a private retirement account rather than paying it to the government in Social Security taxes would still be a dollar the government must borrow. Individuals would be saving more, but the government would have reduced its saving while increasing its borrowing by exactly the same amount. Most of the privatization schemes being put forward call for additional taxes and additional borrowing to finance a transition while benefits were being paid out under the old system.

Alternative Private Investment: Finally, there is this opt-out proposal whereby workers could invest part of their contributions in alternative private investments. The fact that individuals might put their savings in the stock market or in other private assets, whereas the Social Security Trust Fund buys government bonds, also doesn't affect the level of saving at all. If it did, the government could increase the level of saving in the economy by borrowing money and then investing it in the stock market, or by borrowing money and giving it to individuals with the requirement that they invest it in the stock market. If either step could increase the level of saving in the economy, the government should take it independent of any changes in the Social Security system. There also other differences in the private investment and government system. For example, it is easy to see why costs in the private financial sector are so much higher. The private sector pays hundreds of thousands of insurance agents and brokers to solicit business. It also incurs enormous costs in television, radio, newspaper, and magazine advertising. In addition, many executives and brokers in the financial industry receive huge salaries. Million-dollar salaries are not uncommon, and some executives earn salaries in the tens of millions. Privatization would add these expenses, which are currently absent from the Social Security system......

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