Social Security Reform

Essay by PaperNerd ContributorUniversity, Bachelor's October 2001

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Macroeconomics ECO252 28 Feb 2001 Social Security Reform The term Social Security was first used in the U. S. by, Abraham Epstein, in connection with his group, the American Association for Social Security. The Social Security Act of 1935 was originally named the Economic Security Act, but this title was changed during Congressional consideration of the bill. Social Security is a family protection plan and a retirement program that provides benefits to spouses and dependent children of wage earners who die or become disabled during their working lives, workers who become disabled, surviving spouses aged 60 and over, and surviving spouses aged 50 and over who are disabled. The Social Security Act also contains Medicare, which provides health insurance protection for the elderly and disabled. All the Social Security features together are part of a reasonable social and political agreement to guarantee some minimum income and health benefits to everyone in out society, regardless of economic circumstances.

More than 139 million workers pay 6.2 percent of their earnings, up to a maximum of $80,400 in 2001, to fund Social Security. These workers finance the program through a payroll tax that is levied under the Federal Insurance and Self-Employment Contribution Acts. The revenues are deposited in two trust funds, which pay benefits and the operating expenses of the program. Surplus monies are invested in interest-bearing securities guaranteed by the U.S. Government. Social Security is and important source of retirement income for almost everyone; three in five beneficiaries aged 65 or older rely on it for at least half of their income. The Social Security program paid out over $5.896 trillion in cash benefits from 1937 (when the first payments were made) through 1999. The Social Security benefit formula is designed so that if you have average earnings all through your working...