So, where is this Social Security thing going? Will possible changes in benefits be a “train wreck” for us Boomers, or will the changes only have a bearing on those under forty years of age? We aren’t going to know the answers until Congress acts but we can look at history and our current economy to get some idea of what is around the corner.
Let’s look at the history of Social Security in America. Remember when it started? FDR signed the Social Security Act in 1935 which set the program in motion. Payments began in January 1937 which went to the primary worker in the family as a retirement benefit. It didn’t take long to start adding other side benefits to this Social Security Act.
Survivor benefits for the spouse and children of the retiree started in 1939. In 1956, Disability benefits were added to the list, and finally Medicare became law in 1965. The larger programs that are now in the law:
* old age retirement
* survivor benefits
* disability benefits
* unemployment benefits
* temporary assistance for needy families
* Medicare health insurance for elderly and disabled
* Medicaid medical grants to states
* childrens health insurance (SCHIPS)
* Supplemental Security income.
Many Americans now think that the program is totally out of hand. Is the government the most qualified agent to run these programs? Has it gotten too inclusive? What did families do before Social Security?
The original plan has expanded several times to include more groups of citizens. Survivor benefits were established to help widows and children of breadwinners that died at a young age. The next step involved help for the disabled. Then came unemployment benefits followed by temporary family assistance programs.
Now, we have Medicare and Medicaid providing health care for the elderly and the disabled. This system has truly grown from an acorn to a mighty oak tree in a matter of 75 years. Realistically, there would probably be little or no concern for this growth in benefits if the ratio of taxpayers to benefit recipients had stayed the same. We used to have in this country at least ten workers paying taxes for every retired or disabled worker receiving a monthly check. Not any more.
So, when we talk about the future of Social Security (and all of its various programs) we know that something has to change very soon. In the immediate future there will only be two workers for every retired or disabled worker. There is no way to collect enough tax money from those two workers to pay for the current plan. So, what do we do?
For the last several years Congress has ignored the problem for fear of alienating their voters and losing power. We the people of these United States can no longer worry about political elections while kicking this huge problem down the road. Combine the Social Security scare with our current debt and over spending concerns and we are headed for some type of disaster.
Will Social Security survive? It has grown to the point that it now takes care of millions of Americans for many more reasons beyond the original hope of providing some supplemental income for breadwinners when retirement age was reached. We will soon have only 2 workers paying in for each recipient because we Boomers are retiring from the work force. So, where will the funds come from to keep this all going?
Well, the race is on to see who can come up with a workable idea. The most notable approach so far was introduced by House Budget Committee Chairman Paul Ryan. His 73 page report is a 10 year plan to reduce the United States deficit by $6.2 trillion dollars (the deficit is actually about $14 trillion right now).
Ryan’s plan cuts the waste in poverty programs, and then gives seniors a choice in how to spend Medicare funds the way they prefer. Liberal critics of poverty cuts need only look at the results of the welfare program cuts in the 90′s that worked quite well. All Americans 55 and older would not be affected by the Medicare changes. The plan would eliminate the “fee for service system” that drives up demand and, of course, eventually drives up prices.
Each senior would have a pool of money to spend at their own discretion. Guess what this does? It makes you choose the services you need rather than take advantage of the system as many Americans do now. This can help Medicare survive.
Ryan’s plan, however, does not touch Social Security. The plan does much to eliminate loopholes in the tax codes which would be a welcome change. Those changes in the tax codes, changes in poverty programs, and changes in Medicare almost cut the deficit in half. Social Security will be another plan for another day. But we can see where this is going… changes are on the way for Social Security to keep it financially viable.
Like the Medicare recommendations in the Ryan plan, you would have to guess that changes in Social Security will not affect Boomers over a certain age. But it’s time to get real. Changes are coming and it’s just a matter of time. It’s now time for Congress and our President to step up and do what’s right for “we the people” instead of what’s right for their political parties.