Social Security Reform
A little over 60 years ago the nation struggled through what was, up to then,
the most dramatic crisis since the Civil War. The economy was uprooted after the
crash of the stock market and the country's financial stability destroyed. One
of the many steps taken to alleviate the burden on the American people was that
of the passing of Social Security Act of 1935 and its amendments by Congress and
the President, Franklin D. Roosevelt. Under the provisions of the Act, the
government would take on the responsibility of taxing the income of all working

Americans and returning the money through numerous public benefits and programs.

Now the nation faces an economic and political problem with the program
instituted to earnestly help the people. In the first half of the next century
the government will face the task of paying benefits to a large generation with
funds it will not have. This year Social Security assistance accounts for over

20% of the federal budget and will make up even more for the years to follow.

Almost all political sides agree that Social Security must be reformed in some
way before the baby-boomer generation begins to retire and collect. Social

Security benefits refer to all those measures established by the government
through legislation that help an individual or household to maintain an income
of a certain level, insure income if one's employment is lost, provide other
assistance for disability, old age, survivors, and other forms of compensation.

Social Security may be defined through several characteristics: (1)
participation is mandatory. Everyone, including children age 5 or older, is
required to have a Social Security (2) Eligibility for benefits and levels of
benefits depends on past contributions made by earners. (3) Benefit payments
begin at a stipulated time such as at retirement from work, upon temporary
unemployment, or with disability (4) Social-insurance benefits are means-tested
- one's wealth or lack does not determine whether benefits are granted
(Compton's). (5) Currently SS funds are collected and distributed on a pay - as
- you -go (PAYG) system in which Social Security taxes from individuals are
immediately distributed by the means of the SS Administration as it sees best
fit. This means that taxes collected are not reserved for the individual who has
paid them: in Rose 2 the current state he or she must rely on those persons
paying SS taxes during the time of their retirement (Becker). For a number of
these characteristics and future issues, the Social Security System must be
reformed or completely abolished to meet the needs of tomorrow. The leading
concerns of Social Security that merits the immediate initiation of reform are
the demographic and economic circumstances in the coming century. Even though
"forecasting the economy and budget over such a long period is
uncertain" there remain many "certainties" regarding problems
facing Social Security in the first half of the 21st century (OMB, Budget

Perspectives 23). The Federal Government's responsibilities extend well beyond
"the five- or six-year window" that has restricted the focus of recent
budget analysis and debate. Of these "certainties" are the mounting
challenges posed from the baby-boomer generation. This generation, born in the
years after World War II, is aging and will "begin to retire around the
year 2005. By 2008, the first baby-boomers will become eligible for social
security"(OMB 23). With the increased expenditures for baby-boomer group
and pre-existing entitlements, a serious strain will be placed on the budget for
the majority of the next 100 years. As currently, the PAYG system has allowed
for four workers to pay for every retiree. "But, when the baby boom
generation retires, eventually only two workers will be paying for every
retiree"(OMB, 1998 Budget 195). Long range projections from research done
by the Congressional Budget Office last year observes that "Those fiscal
demands could produce unattainably high levels of federal debt and taxes unless
additional actions are taken to control federal spending" (OMB, Budget

Perspectives 25). The baby-boomer issue is not the only problem facing the
future of the budget regarding Social Security. The Social Security Trustees

Report projects that population growth is expected to slow over the next several
decades. This slowdown is expected to lower the rate of population growth making
older groups and retirees a very large percentage of the population. The labor
force participation (by percentage) will therefore decline as the average age
increases (OMB, 1998 Federal Budget 196). This decrease in the number of Social

Security paying workers will undoubtedly make for an abatement in the total
amount of Social Security taxes collected each year to be distributed in
services. As this occurs the Federal Government