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Social Security

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by

Sam Pottinger

on 26 April 2010

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Transcript of Social Security

The 1920's Black Tuesday FDR: New Deal “in time . . . establish a self-supporting system
for those now young and for future generations” How Social Security Works Workers FICA Taxes Social Security Administration Retirees Disabled Relatives Employee: 6.2%
Employer: 6.2 %
Total: 12.4% Credits Changes Life expectancy increased from 61.4 to 75.7 years for men (SSA, 2009 report) 76 million baby boomers inch closer to retirement age (prb.org) The Social Security Administration's Projections OASI will begin negative cash flow by 2017 Insolvent by 2039 The Reality The trust fund does “not consist of real economic assets [and,]
when redeemed, will have to be financed by raising taxes, borrowing
from the public, or reducing benefits . . .” (Tanner 2). Disability insurance already began negative cash flow in 2005 New funding needed by 2017 Trust Fund The Bigger Problem OASI DI earn half the wages of others aged 18 to 64 (NASI) Drive Americans other costly welfare programs FICA Tax Increase Larger number of workers = less impact Increase in the FICA tax from 12.4 to 15.13 percent Keeps the system solvent through 2025 Privitization Surplus Private Investment Trust Fund 1.23 percent annual return rate Expected 5 percent annual rate of return Lowest historical over any 20 year period has been 2.6 percent SSA could guarantee the level of benefits under the old system Surplus through 2035 Dependency on government will gradually reduce Greater Leagal Control “Flemming v Nestor,” : workers have no “no legally binding . . .
right to their Social Security benefits” (Tanner 5) Real ownership of their own assets SSA will have regulatory powers to ensure diversification in portfolios Benefits could not be drawn until retirement, disability, or emergency Legal control over where to invest the money Property rights, including inheritance Private investment could be foregone in exchange for lower montly benefits Macroeconomic Benefits 1,748.7 billion dollars over next 25 years I P Q Recursive Effect! As businesses turn these savings into capitol, production costs will decrease. AD AS PPF returns for PI higher employment less spending higher FICA taxes More FICA money
twoards PI larger PPF = higher tax revenues Philosophical Argument Under this nation's Lockean philosophy, government's foremost purpose is to protect the natural rights of its citizens, ensuring that no American “be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation” (U.S. Const., amend. V) Preamble: "promote the general welfare" “the Debts and provide for the common Defense and general Welfare . . .”
(US Const., art. 1, sec. 8, cl. 1) Supplemental Security Income 50,192 million USD in 2009 Continue to maintain at the rate of inflation In 2020, this amount will begin to reduce because of private investment Compromise? 15.75 % FICA Taxes until 2020 "LIFE Photo Archive Hosted by Google." Time Magazine Online Photo Archive. Web. 26 Apr. 2010.
<http://images.google.com/hosted/life>. full works cited in term paper
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