The Third Rail: Social Security

The Social Security Program is a good thing, right? It is the most successful program that the United States has ever created. This program was established in 1935 to protect individuals and their families from unanticipated misfortunes like: unemployment, disability insurance for workers, and other benefits. Social Security is a "security fund" that was created to help people in their time of need.

Up until two years ago this is what I thought. I wouldn't even think twice to say that a lot of people thought that this program was secure and impenetrable. Most of the people that are able to receive Social Security don't know much about the program or why it started, and what it's really "suppose" to be used for. There is a lot of history to this program, and believe it or not it was not originally American. This program that was re-established in America by President Franklin D. Roosevelt was to help people. A "security fund" that would be there if any kind of misfortune were to occur. Although this is what it was meant for, some may still ignorantly call Social Security a "Retirement Fund," and those people are about to be in for a rude awakening. If Americans would have known the history behind the program I'm pretty sure a few more people would have started their own privatized retirement funds a long time ago (John).

Now that we have established the proper use for Social Security in America, we can talk about the history of this system, since the idea wasn't created in "God Bless America." The original Social Security system was created by Otto von Bismarck in 1883. The Social Security Program's origin was Germany, and at the time it was called Prussia. It was created to win the support of the working people that were unhappy with high taxes and prices that were needed to support the large German military and currently high prices that the government created for industrial cartels. Social Security still sounds like a pretty decent system even though it wasn't created because I'm still going to get money and all of the full benefits when I turn 65. Life isn't sounding too bad. (O'Brien).

When government produced "The Prussian concept" it wasn't at a confetti cake with frosting, and a good deed that German government was doing for their people. The Prussian government coaxed their citizens, and got them to support this concept that they would finally be receiving something from government. The people were foolish because little did they know that is was all a scam. They took polls from paperwork and found out that life expectancy for an average working person during that time period was the age of 65, and isn't that convenient that the age that was used for the working class to be eligible to receive money was that exact age. Bismarck figured that all of the people would live to that age, and then die without receiving a penny from the system. Wow, socialist authoritarian governments are doing a pretty good job. Bismarck did set this system as a retirement fund, and the few that were still living after 65 would receive money. The German system was made for people that were incapable of handling their own funds, and unaware of their paternalistic socialist state. The only reason they wanted this system was to make their citizens think that they weren't going raise taxes, and do something for them. This is how Germany got the support of the working German citizens (Greenstein).

This system started to become popular, and still no one new what the Germans really had in mind, and if you missed that paragraph it wasn't for the good of the people. Well on that note I will tell you that Franklin D. Roosevelt was having a few issues with gaining the support of the working class during the Great Depression. Taxes were to high, and everyone was unhappy with the economy. At this point in time everyone was vulnerable and would support anything that would help their morality in these circumstances. I'm not talking about another Hitler grabbing the support of a population when they needed to bring their spirits up. I mean, do you really think that they would have supported Hitler if they new that he would start a mass genocide that came with a world war? No (O'Brien).

President Roosevelt took the Social Security idea to another level. He was actually going to help the American citizens, and had good intentions in keeping his word. He did raise the low spirits that were produced during the Great Depression. The Social Security Program was created in 1935 right before the election of 1936. This program was started as a paternalistic system in Germany, and in America it was started as a "Security Fund" to help provide people with money when they were unemployed, or faced with misfortunes. This is exactly what people needed during the depression, a helping hand. This helping hand that was created in 1935 soon transformed from a "security fund" to a "retirement fund (John)."

The Americans that are using Social Security as their retirement fund are going to be in deep trouble when the year 2030 approaches because at that time there won't be enough money to be able to pay full benefits after that date. The reserves are needed for Social Security to be backed by Treasury bonds with the full faith of the United States Government, and without that there is no security, and now the trust fund where all the social security payments are being put is now declining. Are you still comfortable with this system? "Living the Dream" as some may put it? Not so much.

In the beginning of the Social Security Program money had to come from somewhere, so it was being taken out of the current cash flow. Politicians, Republican and Democratic, both agree that the money was taken from the employees and then put into a "trust fund," invested, and then put into contributions to be invested for the retiree. At first the money was taken from the current cash flow because there weren't any people to start off for the newly retired. As Social Security taxes were paid into the system, the funds were taken out to beneficiaries. The system was doing okay for itself because when more taxpayers retired; they would be paid from the money taken from the younger tax payers. Well this structure started to crumble because people started to live longer (David).

Whereas in 1883 most people died by the age of 65, by the late 20th Century people were living an average of a decade longer. This meant a huge increase in potential beneficiaries. When the Social Security program began in 1935, there were 16 contributors for every retiree, but a decline in the birth rate paralleling the increase in longevity has dropped the ratio of workers to retirees to only 3 to 1 in the 1990s (O'Brien).

Now that we know that Social Security has had problems not to long from its creation in 1935 it will be hard to avoid when the ball has dropped long before we have come to recognize it as an issue. The ball has been rolling, and it will drop as soon as the Baby Boomer generation starts to retire, and when we come closer to the year 2032. When Social Security started it was sixteen workers to each one person retiring, and "estimates are that there will be only two workers for every retiree by the year 2025 (O'Brien).

When Social Security started everyone knew that there wasn't enough money to last until 2035 so when the taxes were increased in 1983 a reserve fund of $10 trillion was suppose to be created by the year 2030. Social Security has been going up to $70 billion a year to hide some of their massive deficit. People are expecting not to receive anything from Social Security. Another proposal that has become apparent to Congress would be to "privatize" Social Security. But as we have discussed in class we voted on who we would trust with our money, whether it be banker, investor, or politician. When it came down to it the class had led to the conclusion that they didn't trust anyone with their retirement funds. This means that people wouldn't be to confident in handing over their retirement funds to a politician. If politicians promise everyone that have put money into the retirement fund will get what they have promised from Social Security then they are lying. Because of the transition from security fund to retirement fund people have not been saving as much as they should have; using social security for the wrong reasons. Ladies and the gentleman we have reached a point where individuals must be able to save and allocate funds intelligently because the end of Social Security is here (John).

Discussions of Social Security remind me of the joke about a man who jumps from the top of a fifty-story building and after falling half-way is asked, "How are you doing?" He answers, "Fine, so far." The issue of Social Security has long been considered the "third rail'' of politics - as on the electrified subway: "touch it and you die." But like the falling man, Social Security is not really "fine." (O'Brien).

No one is going to do anything until it actually happens. The majority of the population is unqualified to handle their money intelligently, let alone allocate their own funds as they use their "Security" savings as retirement support. Enabling an individual to save and allocate funds evenly is a big responsibility, because no one has ever thought of or needed to take care of their own money for emergencies, investment, and retirement. In concordance to the previous statement I have been able to recognize that the ability for a person to save money is difficult. It is the year 2007, and if Americans have been saving appropriately since the beginning of their careers there would not be a problem when this situation had risen. I do not think that people should blame the government for their lack of responsibility to save their own money. Now that people are aware of this bad habit, a few solutions to saving "The Social Security Program" come to mind. There are only three logical solutions that would actually be appropriate to solving the Social Securities rapidly approaching fiscal problem, which are: raise taxes, reduce spending, or make the current payroll taxes work harder by investing in private retirement accounts such as one of the eight available IRAs. If you really think about it, how many eligible citizens would vote for a president that said he was going to raise taxes? Not very many I would assume. How many would reduce spending? Not that many either because everyone is so accustomed to their style of living. The last one would not work at all because we wouldn't have this problem in the first place if people had already been saving money. Why would those three solutions work? Why would people want to be responsible, and make a slight adjustment to their taxes or even save up for their own retirement like they are suppose to? (John).

At this point we must end Social Security because of the lack of cooperation. Citizens must be able to realize the current bankruptcy of the Social Security system. We need to end Social Security and go back to total control over retirement savings, and we would need to help the individual worker and allow them to receive a decent amount of return on their hard earned money. Self reliance is a good thing, and we as citizens of the United States must not depend on something that we can give ourselves. The things that the government must provide us with are things that we cannot provide ourselves, like a military force, education, and roads. We should take what we have and deal with it because sooner or later the ball is going to break.

As famous leaders, the last lick of an ice-cream cone, and a shooting star, great things must come to end regardless of our desires

Works Cited:

Greenstein, Robert. "Understanding the Financial Status of the." 1998. 02 Jun 2007 .

L. Obrien, George. "It's Time to End Social Security." ISIL. 11 Jun 2007 .

John, David. "Finding Solutions." Social Security Reform Center. 10 Jun 2007 .