Social Security Privatization essays

Social Security Privatization essays Over the past few decades, social security has transpired to be one the most debatable as well as one of the biggest federal programs. Even though the benefits derived from the program are well-liked by the recipients, there is still concern about the issue of retaining enough revenue to continue to ensure the benefits of the program in future generations. The real concern is what to do with the system when the baby-boom generation begins to retire in 2010. No one can be sure if the currently imposed taxes are sufficient to fund the benefits (Aaron 1989). The current system that was started in 1935 taxes the wages of the American people, and then deposits these revenues into the OASDI Trust Funds. This pay as you go system takes the revenues from the current working generations, and uses the funds to pay the current beneficiaries of the program. However, as the number of beneficiaries increase in the coming years, there may not be enough revenues to provide the same amount of b enefits. More important, however, the reports project that unless corrective action is taken, the Social Security program will become insolventno longer be able to pay promised benefits in fullaround the year 2030, well within the retirement years of the baby boom generation (Diamond 1996). Some economists argue that the social security tax may need to be raised to a level of 25% to allow for the same level of benefits. One proposed solution to the problems of the current pay as you go plan is to impose a system that would privatize the contributions of individuals. The plan presented in the earlier years by the Entitlements Commission, would be to shrink Social Security by enough to permit part of the payroll tax to be put into individual accounts, and let individuals control the accumulation until they reached retirement age (Skidmore 1999). Several different ideas for privatization have been introduced to the government, varying in ...