Social Security Policy

1. Overview of Social Security Policy

All people in the world, in the history of human evolution, have encountered uncertainties that arise from issues such as sickness, infirmity, death, joblessness, and elderliness. These challenges have contributed much to the capacity of such individuals to be economically secure. The community often assumes the burden of maintaining their economic status  at a survival level. Many agencies and organizations also do set in to assist the destitute and the disadvantaged  in the community. In this vein, the population develops charity programs aimed at rescuing the economic and financial deterioration of those faced with such inevitable facets of life. In America, the government acted toward social inequalities by enacting a social welfare policy, ‘Social Security Policy’.

Social security, in the United State of America, represents the federal programs that target the old age, survivors and the disabled. The policy was made into an Act back in  1935 (Altmeyer, 1968). Since then, several amendments have been championed to incorporate other groups under this umbrella. Currently the individuals targeted by Social Security Act include the unemployed, children, the elderly, the disabled and survivors. The programs that fall under this Act include federal Old-Age (retirement), Survivors, and Disability Insurance; Unemployment benefits; Temporary Assistance for Needy Families; Medicare; Medicaid; State Children’s Health Insurance Program; Patient Protection and Affordable Care Act and Supplemental Security Income (Dewitt, 2010).

The problem that led to the enactment of this legal document is rooted in the period of the Great Depression that hit the American economy in the first half of the twentieth century. The unemployment level escalated over 25% with over 10,000 banks collapsing. During that time, the country was stricken by poverty, to an extent of GDP declining from $105 in 1929 to $55 in 1932. As a result, in 1934, about half of the elderly population in USA were unable to support themselves financially. This was attributed to the lack of sufficient income among them. Though there were pension programs for the old in the 1930s ran by some states, the policies were weak and ineffective to solve the problem. These plans only benefited roughly 3% of the elderly population, which was unsatisfactory. In addition, the need to establish a program that would benefit the hundreds of thousands of widows, orphans and disabled veterans, years after the world war, was evident (Altmeyer, 1968).

By 1930, the proportion of individuals living in the cities had increased to over 56%. This was the result of the changes brought by the industrial revolution, which made  people more reliant upon employment rather than agricultural oriented. However,  industrialization failed to cater for the basic needs of the  society with soaring unemployment rates, low wages, and high percentage of disabilities received at work. The urbanization resulted in the increase in the  number of the unemployed, which led to the disintegration of the family structure. The old people were left economically unstable. The trend toward urbanization resulted in the collapse of the extended family. This resulted in a situation  when the old people were left without people who would take care of them since all energetic population had left for employment in the cities (Dewitt, 2010).

By the time the policy started to be endorsed, the population of the old people had hiked to over 7.8 million (Social Security Online, 2011). The major contributor to this was an  improved healthcare system that led to an increase in the life span. By this time, the survivors of the world war were had already formed lobbying groups to fight for support from the government. The government found the necessity to support them financially, since most of these veterans were disabled, and did not have anyone  to rely on for a living.

The combination of all these changes led to the formation of  a society that was older, urbanized, industrialized and had fewer rural dwellers. This weakened the economic security strategies, which existed at the community levels. Therefore, federal government intervention was necessary to cater for the needs of the less privileged individuals in the society.

1. Historical Analysis

Impetus of Social Security Policy

The original Social Security Act was signed to a law on August 14, 1935 by the then president of the United State of America, Franklin D. Roosevelt. Before the officials  realized the need to take responsibility for the citizens’ social security, the economic inadequacies had been resolved by of the institution of an extended family, church and trade unions. The trade welfare associations had been  known for cushioning their employees during the times of financial difficulty.  The families were also responsible for ensuring their members faced no starvation and destitution. In the community, there were also charity organizations that help to look after the less privileged. Before the enactment of the social security act, other policies and programs had already been pursuing some of its aims.. For example, the pension program compensated the veterans. At the same time, most of the disabled and the elderly had no federal or state policy to fund them (Social Security Online, 2011).

Amendment Social Security Policy

From the time the policy was enforced into a law, several amendments have been done. In 1939, the act was doctored to allow provision for the surviving spouses and minor children to benefit from the program (Social Security Online, 2011). In 1950, the number of individuals benefiting from Social Security Act escalated. This was coupled with expansion of benefits that the beneficiaries were to enjoy. One of the added benefits in this program was the Cost of Living Allowance that was aimed at improving the living standards of the US citizens. The policy absorbed the Disabled Insurance program to cater for the demands and needs of the disabled individuals. This together with the passage of law setting the retirement age for women at 62 years raised the payroll taxes to 4% (Dewitt, 2010).

In his tenure, President Lyndon B. Johnson signed the Medicare act, in 1965. The incorporation of this recommendation into the social security policy added yet another burden to tax payers. Medicare ensured that the beneficiaries of the social security program who are over 65 years old would be covered for their health care. Currently, the Health Care Financing Administration maintains Medicare program. By the year 1972, the consumer prices were on an increasing trend. This resulted to amendment of the law to provide Cost of Living Allowance on yearly bases (Altmeyer, 1968).

After President Lyndon vacated the office and President Reagan assumed the powers to lead America, Social Security Policy continued to undergo modification. In 1983, President Reagan signed into law the provision to tax the social security benefits. The beneficiaries’ definition was also modified to include the federal employees as well as recommending for raising the age limit for retirement (Social Security Online 2011). It is during Reagan government that the funds management for the Social security program was detached from the federal government monitoring. This was aimed at easing the process of managing the funds. A more recent addition to the policy is the H.R.5 ‘Senior Citizens Freedom to Work Act of 2000’. This act allows those beneficiaries of the program that have retired, but still continue working to retain their benefits without decline (Dewitt, 2010).

Initiators of the Policy

The social security policy realization can be attributed to a number of individuals who initiated the interest and those who propelled the idea forward. President Roosevelt made a core contribution to the formulation of this act. He is deemed responsible for the formation of the draft recommendations to the Congress by the Committee on Economic Security that he established on June 8, 1934. Other people who contributed to the birth of the policy include Huey Long (who started the Share Our Wealth program), Charles Coughlin, Upton Sinclair (initiated the End Poverty in California program) and Francis Townsend (formed the Townsend Clubs). These people created the awareness in the community and among the government officials on how teamwork can help solve economic inequalities (Social Security Online, 2011).

Opponents of the Policy

The opponents to the social security policy relied on the claims that this approach  would lead to the loss of jobs, in addition the proposal was deemed a manifestation of  socialism. As a matter of fact, the capitalists were chief opponents of the policy. The results of the opinion poll conducted in 1939 showed that 24% of the peak business executives did not support the policy (Amenta & Parikh, 1991). In particular, Albert D and Samuel Reyburn were among the people who testified against the favor of the act in 1935. The National Association for the Advancement of Colored People was another leading opponent of the social security. It argued that the policy was discriminative and hardly favored the black population (Dewitt, 2010).

Degree of the Effectiveness of the Program

The program expands its beneficiaries’ boundaries every year. By the year 2008, the total number of beneficiaries was over 50.8 million. This had amounted to a total of over $ 615.3 trillion from the initial $1.278 million. However, many analysts have feared that the policy will peter with time as the number of beneficiaries exceeds the capacity of the program support. The annual report released in 2010 by the social security trustee says the revenues are way off balance to the benefits. The Social Security trust funds’ treasury security amounts to $ 2.5 trillion (Gokhale, 2011). This value is forecasted to maintain the program until 2037. However, drawing down the trust fund implies that the program will increase the future federal insufficiency by over $100 billion as from 2020 up to 2037. By this time, the trust fund will be exhausted. The Social Security trustees released a report showing that the total shortfall for the system amounts to $16.1 trillion.

The major weakness in the payroll system is the funding, which goes hard in hard with pay-as-you-earn taxation. Newer generation reaps more benefits than their contribution during the working times. The increasing trend of tax payroll is aimed at covering for the shortages of the subsequent generations. In the process, each generation leaves a legal deficit that grew from generation to generation. The government was adamant to reveal the weakness until 2003 when it announced the first legacy debt. The rescue of the collapse of this policy is based on the current Obamacare that is expected to cut down Medicare and Medicaid expenditures (Gokhale, 2011).