American Economics Essay Research Paper A Report

American Economics Essay, Research Paper

A Report on American Economics in English Includes Social Security. 006 American Government-Economics Most of the problems of the United states are related to the economy. One of the major issues facing the country today is social security. The United States was one of the last major industrialized nations to establish a social security system. In 1911, Wisconsin passed the first state workers compensation law to be held constitutional. At that time, most Americans believed the government should not have to care for the aged, disabled or needy. But such attitudes changed during the Great Depression in the 1930’s. In 1935, Congress passed the Social Security Act. This law became the basis of the U.S. social insurance system. It provided cash benefits to only retired workers in commerce or industry. In 1939, Congress amended the act to benefit and dependent children of retired workers and widows and children of deceased workers . In 1950, the act began to cover many farm and domestic workers, non professional self employed workers, and many state and municipal employees. Coverage became nearly universal in 1956, when lawyers and other professional workers came under the system. Social security is a government program that helps workers and retiredworkers and their families achieve a degree of economic security. Socialsecurity also called social insurance (Robertson p. 33), provides cashpayments to help replace income lost as a result of retirement,unemployment, disability, or death. The program also helps pay the costof medical care for people age 65 or older and for some disabledworkers. About one-sixth of the people in the United States receivesocial security benefits. People become eligible to receive benefits by working in a certainperiod in a job covered by social security.Employers and workers finance the program through payroll taxes.Participation in the social security system is required for about 95percent of all U.S. workers.Social security differs from public assistance. Social security paysbenefits to individuals, and their families, largely on the basis ofwork histories. Public assistance, or welfare, aids the needy,regardless of their work records.All industrialized countries as well as many developing nations have asocial security system. The social security program in the United stateshas three main parts. They are (1) old-aged, survivors, disability, andhospital insurance (OASDHI), (2) unemployment insurance; and (3)workers’ compensation. THE SOCIAL SECURITY PAYROLL TAXThis tax was to be taken from the payrolls of the nation’s employers andemployees. The government felt that, like unemployment benefits, thesocial security should be financed by those who got the greatestbenefit, those who worked, and were liable to need those benefits in thefuture. A plan that would affect those only who had paid such a tax for anumber of years would have done those who were currently suffering underthe Depression no good at all. As a result, the social security planbegan paying out benefits almost immediately to those who had beenretired, or elderly and out of work, and who were unable, primarilybecause of the depressed economic conditions, to retire comfortably. Inthis way, the government was able to accomplish two objectives: first,it helped the economy pull out of the depression, by providing a meansby which old people could support themselves and, by buying goods andservices, support others in the community ; and second, it showed theyounger workers of that time that they no longer had to fear living outtheir retirement years in fear of poverty.Therefore, the social security payroll tax has been used to providebenefits to those who otherwise would have little means of support, andas of this writing, there has never been a year when Social Securitybenefits were not paid due to lack of Social Security income. (Boskinp.122) PAYING OUT BENEFITS Social Security benefits increased 142% in the period between 1950-1972.not only the elderly, but many of the survivers, the widows and children, ofthose who paid into theSocial Security system, have received social security checks. Thesechecks have paid for the food shelters, and in many instances thecollege education of the recipients.Unlike private insurance firms, the United States Government does nothave to worry about financial failure. Government bonds are consideredthe safest investment money can buy-so safe, they are considered “riskfree” by many financial scholars. (Stein p. 198) The ability of theUnited States Government to raise money to meet the requirements of thesocial security should be no more in doubt than the governments abilityto finance the national defense, the housing programs, the StateDepartment, or any of the other activities that the federal governmentgets involved in.By paying out benefits equally to all participate in Social Security-that is by not relying so heavily on total payments in making thedecision to pay out benefits, the system is able to pay benefits topeople who otherwise may not be able to afford an insurance program thatwould provide them with as much protection. One of the main reasons forthe government’s involvement in this program, is its ability and itsdesire to provide insurance benefits for the poor and widowed, who underthe private market, might not be able to acquire the insurance tocontinue on a financially steady course.The government, then, is in a tota