Social Security

Social Security is a compulsory social insurance program primarily for old people and the disabled, sponsored by the U.S. federal government. It is strongly endorsed by all major conservative politicians in recent decades, and was expanded by presidents George W. Bush and Dwight D. Eisenhower, and put on a stable financial basis by Ronald Reagan. Social Security includes Medicare, starting in 1965, which covers medical costs of beneficiaries.

Social Security is part of the welfare state, but it is not considered a welfare program because the beneficiaries have paid into it all their working lives.

Social security programs were first introduced by conservatives and pro-business politicians, such as Otto von Bismark in Germany and Winston Churchill in Britain, in order to weaken Socialism. All developed countries have a system somewhat similar to the U.S.

History

In 1889 Germany was the first country to introduce government pension plans. Britain introduced its program in 1907.

United States

In the United States Social Security was founded as a quick-fix solution to unemployment by paying off older workers to give up their jobs for younger workers.

The bill was passed by Congress in 1935, endorsed at the 1936 election, and started operations in 1937. Since benefits required at least 5 years of payments, a special program was included in 1937 to help old people who already were retired and who had high rates of poverty.

The Social Security Act was drafted by President Franklin Delano Roosevelt's committee on economic security, under Edwin E. Witte, and passed during FDFR's first term which provided for workers who reach the age of 65 a pension of $8 a week at most. The plan had to be pushed through against FDR's procrastination until finally in the 1934 congressional elections the Republicans denounced him for his tardiness. When FDR finally consented to a bill, it contained a plan for building a huge reserve fund that would extract billions from the workers' payrolls without any adequate return. Over the protest of the President, the Congress finally took that provision proposed by Roosevelt out of the law.

Social Security has been called the "third rail of American politics" because politicians get badly burned if they try to tamper with it. In 2009 conservatives attacked the Democrats health care reform program because it involves large cut-backs to Medicare.

In 1965, prodded by liberal president Lyndon Johnson, Congress enacted the Medicare program as part of the "Great Society." Medicare operates as part of Social Security and provides affordable health care to beneficiaries over the age of 65. A Medicaid program was established to provide health care for poor people who can not afford private health insurance.

Social security will face many problems in the 21st century, most notably the aging of the population in developed nations, although more problematic in Europe and especially Japan, will strain American social security budgets

Social Security and African-Americans

When Social Security was first passed most blacks worked on farms or as domestics and were not covered. Nearly all have left the farms--and the the few remaining domestics are now covered.

The amount of social security benefits received depends on how long one lives after retiring. African-Americans generally have lower life expectancies than other groups. When a black man reaches age 65, he is expected to live only another 13.9 years, almost 2 years (24 payments) less than a white male. The RAND Corporation concluded that, because of differences in life expectancies and marriage rates, on a life-time basis the income transfer from blacks to whites is as much as $10,000 per person. However, blacks aree more likely to receive disability benefits.

African-Americans are much more likely than other groups to be largely dependent on Social Security for retirement income.

Reform

Is Social Security going bankrupt? Actuaries say that thanks to the Reagan reforms of 1983, Social Security is fullly funded for 75 years. Medicare is much harder to gauge, because no one knows the future rate of growth of medical costs, which have been quite high in recent decades.

In 2005 President Bush proposed a privatization program that would allow people to control their own Social Security accounts, especially by investments in the stock market. He argued that the stock market provided higher rates of return. The proposals got little support and were dropped. The stock market collapse in the Recession of 2008 chilled enthusiasm for similar proposals, and no prominent politician in 2009 is proposing privatization.

Pros and cons of social security

This is a list of the most common arguments used in favour of, and against social security, some may not apply to American social security, since it is not as extensive as that of other developed nations.

Pros

Safety Net

• Guaranteed affordable health care for everyone over 65.
• Guaranteed income for the elderly who can't afford a private pension plan.

Security

• Pensions can not "disappear" because of fraud within a pension fund, or because a pension-funds goes bankrupt.
• Victims of an economic recession won't fall into extreme poverty.
• Social security decreases extreme poverty, which in turn decreases crime .

Cons

• Individual Empowerment: individuals would have more motivation to work hard and succeed, this does however doesn't benefit the disabled and the economy is unpredictable (recessions).

• Higher Returns and Greater Benefits: even the most conservative investors would accrue substantial assets during their lifetimes through privately invested accounts, yielding far more than Social Security promises in retirement income.

• Improved Economy: economists believe that the overall economy will benefit from an increase in savings and investment resulting from this system.

• Some individuals will get "lazy" and choose not to work, only costing society.

• Economic costs of the program. It is estimated that Social Security will be broke in the early-to-mid 21st century.

Further reading

• Beland, Daniel. Social Security: History and Politics from the New Deal to the Privatization Debate (2007) excerpt and text search
• Glenn, Brian J. and Steven M. Teles, eds. Conservatism and American Political Development (2009), two chapters on conservatives andSocial Security issues since 1930s excerpt and text search
• Shoven, John B. and George P. Shultz. Putting Our House in Order: A Guide to Social Security and Health Care Reform (2008), a conservative analysis excerpt and text search