Introduction
A. THE SOCIAL SECURITY ACT OF 1935
Social security is a conceptual goal that centers on the maintenance of protection of all citizens from risks stemming from economic instability. Programs that center on social security is underpinned by the desire of the people to be secure that such security is available to them in times of contingencies. The United States is the first country to use the term ‘public security’ when it passed the Social Security Act of 1935 (Mckay 39).
The Social Security Act of 1935 is deemed one of the most importance pieces of legislations passed by the US Congress. Passed during the Roosevelt Administration, the law was spurred by the Great Depression – an era that put the American economy to a grave test and placed many Americans on the brink of poverty. Originally, the Act only created a program to secure the economic future of persons during their retirement ensuring consistent flow of income even at the age of 65 and older. The Act, however, went through a series of amendments (PBS n.p.). Today, the law provides substantial support for the US economy providing many jobs for US citizens while ensuring that retirees, disabled individuals and their dependents continue to have income even after work and employment are no longer available to them.
B. A BRIEF HISTORY OF SOCIAL SECURITY
The need for social security is a concern that has always hounded individual members of society. That is why every society in human history always searched for the means to achieve social security: the Greeks hoarded olive oil – a nutritious and long-lasting commodity; medieval Europeans relied on the feudal system to ensure continuity of food, and; people in the Middle Ages resorted to charity. As society became more complex, people began to rely on membership in friendly societies, such as the Freemasons, to ensure that they had fallback in times of economic crisis. As government began to take stronger hold on the economy, ‘poor laws’ started to emerge. England, for example, passed the English Poor Law of 1601, which provided relief to deserving subjects suffering from financial troubles (Social Security n.p.).
The poor laws were brought by the colonists to America. The law was implemented by town elders who determine which person to support and what support to give. Eventually in the 18th and 19th centuries, almshouses and poorhouses were created. However, relief was often accompanied by loss of some civil rights. All these form of social security lacked the feature of a public system. In 1795, Thomas Paine proposed Agrarian Justice in which every person inheriting land would pay 10% inheritance tax. The revenues from this tax would be used to create a special fund from which money would be given to those attaining 21 years of age to give them a fresh start in life. After the Civil War, the government created a pension program to help alleviate the conditions of many women and children who lost their husbands and fathers during the war and war veterans who suffered various physical disabilities (Social Security n.p.).
It was in 1935, however, that Social Security was formally established in the US. Immediately before this, America was plunged into the Great Depression resulting in the dramatic rise of poverty, especially in the elderly. Although 30 states had some form of old-age state pension, only 3% of the elderly had been beneficiaries of them. Several movements influenced the establishment of the Social Security. A Democrat Senator initiated the campaign for the ‘Share our Wealth’ program in the 1930s in which he urged the government to confiscate the wealth of the rich to be given to needy members of society. A doctor from Long Beach started the Townsend Old Age Revolving Pension Plan in which he proposed the implementation of a 2% sales tax to fund a program that would allow the government to give $200 a month to citizens aged 60 and above. Other pension schemes were also proposed by various groups and citizens (Social Security n.p.).
With the uproar created by the various pension plan proposals, the Roosevelt government knew it had to respond. In early 1935, the Community on Economic Security – a committee created by the President to study the feasibility of a social security program – proposed the adoption of a Social Security Act. Roosevelt endorsed it to Congress, which immediately tabled the bill and passed it (Social Security n.p).
Benefits and Impact
A. BASIC CATEGORIES OF SOCIAL SECURITY BENEFITS
1. Retirement Benefits. Retirement benefits are benefits earned by those who pay Social Security taxes during their employment. Every time an employee pays the tax, he or she earns credits that are then accumulated to satisfy the requirement to receive retirement benefits. To avail of retirement benefits, a person must earn at least 40 credits, which is equivalent to 10 years of work. This requirement, however, is applicable only to those born in the year 1929 and above. The amount of retirement benefits that a person will get depends on two things: earnings during employment, and; the age of retirement. A person who earned more in his work is likely to receive higher retirement benefits. A person who retires later than earlier may also receive higher retirement benefits. However, the law sets a minimum age of retirement, which is 62 years old. To get full retirement benefits, a person must retire at his full retirement age, which is based on the person’s date of birth. A person born in 1967 or later has a full retirement age of 67. Those born earlier, have lower full retirement age. Delaying retirement beyond the full retirement age increases retirement benefits (Social Security 1-20).
2. Disability Benefits. Disability benefits are given by Social Security to persons who are not able to work by reason of a medical condition that prevents them from working for at least one year or that may result in death. The conditions for receiving this type of benefit are tough. There are certain requisites that must be passed to qualify for the disability benefits. The tests that must be passed are the recent work test and the duration test. The recent work test is tied to the time a person suffered the disability and the number of years worked. For example, a person who becomes disable in or before the quarter he or she turned 24 needed 1.5 years of work during the three-year period ending the quarter in which he or she became disabled to qualify for disability benefits. The number of worked years required increases with the age of the applicant. Application for disability benefits may either be done online or by calling a toll-free number (Social Security 1-16).
3. Dependent Benefits. Dependent benefits may be paid for principals who are entitled to retirement benefits or disability benefits. In the first case, the following persons may also be entitled to benefits if the principal is entitled to one: a spouse who is 62 years or older; a spouse younger than 62 years old, but is taking care of a child – younger than 16 or is disabled - of the principal; a former spouse who is 62 or older; children 18 years old and younger or up to 19 if a full-time student, and disabled children of any age. Additional requirements for a child of a retiree to get benefits, he or she must be: a biological, adopted or dependent stepchild and is not married (Social Security 15).
Dependent benefits may also be given to the dependents of a principal who is entitled to disability benefits. The following dependents are entitled to benefits under this scheme: a spouse who is 62 years or older or even younger if caring for a child younger than 16 years old and entitled as a dependent of the principal; a former spouse who has not presently married and is at least 62 years old; a biological, adopted or stepchild of the principal who is not married and younger than 18 years old, or 18 and above if disabled and disability occurred before turning 22, or is 19, but is a full-time student and not graduated from high school (Netter n.p.).
4. Survivor Benefits. Survivor benefits are benefits given to the survivors of a principal entitled to benefits under the Social Security. Under this type of benefit, the following are the deemed survivor of the principal: the spouse if at least 60 years old unless suffering from a disability in which case benefits will be granted if at least 50 years old, or at any age if caring for a child of the principal who is 16 years old or younger or any age, if disabled; unmarried children who are 18 years old or younger, or 19 but is a full student and not graduated from high school, or of any age but is disabled and the disability occurred before turning 22 years old, and; dependent parents who are at least 62 years old. Divorced spouses are also entitled to survivor benefits, but they must be unmarried at the time of claim and is at least 60 years of age and was married to the principal for at least 10 years. These requirements for the divorced spouse does not apply if he or she is caring for a child of the principal if the child is 16 years old or younger or disabled. A one-time payment of $255 may also be paid to the surviving spouse or child/children of the principal if some requirements are met. Like in other types of benefits that the survivors of the principal will get depends on the number of years that the latter worked. In addition, the age when the principal dies is also a determinant for the amount of benefits that the survivor will receive (Social Security 1-12).
B. THE SOCIAL SECURITY IMPACT ON THE ECONOMY
The impact of Social Security on the economy is significant, according to a study funded by the AARP Public Policy Institute. According to that study, the impact of these benefits begins the moment the beneficiaries spend the dollars they receive. Reduced to a dollar, every dollar spent by a recipient generates about $2 output. Using an economic model called IMPLAN or Impact Analysis for Planning, the researchers for AARP have determined that the Social Security benefits support about 9.2 million jobs, $1.4 trillion in economic output, $774 billion in value added, and more than $222 billion tax revenues (Koenig and Myles 1).
On the state level, there is an associational factor between a state’s economy and Social Security impact. California, which has the biggest economy of all states, had the largest Social Security impact as well. California, New York, Florida, Texas and Pennsylvania are the top five states that together received almost half of the revenues generated by the Act (Koenig and Myles 11).
On the national level, the same significant impact by the Act on the economy is shown. The more than $700 billion funds spent on Social Security benefits spur the national economy in the areas of employment, employment compensation, businesses, and tax revenues. Reduced to simple terms, Social Security benefits support one job out of 20 jobs in the country, as well as $1 for every $20 of the total value of the country’s economy (Koenig and Myles 12).
C. THE DEBATE ABOUT SOCIAL SECURITY
Despite the benefits accruing to individuals and the economy, both on the national and state levels, generated by the Social Security programs, the American public are dissatisfied with the Social Security Act and all welfare programs of the government in general. One of the issues surrounding the Social Security Act is the anticipated shortfall of the program’s funds. The 2015 annual report of the Social Security and Medicare Board of Trustees, for example, reported that the Disability Insurance Trust Fund of the Social Security is on the brink of depletion. The general outlook, according to the Trustees, is that Social Security cannot sustain the costs of the programs as they are scheduled because of anticipated fund shortfalls (SSMBT n.p.). Moreover, retirees are soon expected to overtake the number of workers, which means that beneficiaries will soon outnumber the contributors to the fund. The raging debate that is underpinned by these issues are whether the government should drop from the business of social security and let the private sector or the individuals themselves handle it (Hodges 5).
Conclusion
A. THE SOCIAL SECURITY REFORMS
There is no doubt that the present social security structure of the US needs to be reformed. As the Trustees explained, there is at present uncertainty facing social security beneficiaries, particularly the disability beneficiaries (SSMBT n.p.). However, even how to reform the system cannot be agreed upon. On one hand, the Democrats insist on maintaining the benefits and find solutions only to the program’s insolvency. The more conservative Republicans, on the other hand, want to cut government spending on welfare programs, including the social security benefits. The government must find a solution that balances the diminution of benefits and the boosting of revenues for the funds taking into consideration the role social security plays in the largely unpredictable global economic environment the people live in.
Works Cited
Koenig, Gary and Al Myles. Social Security’s Impact on the National Economy. AARP Public Policy Institute, 2013. Web. 22 February 2016.
Hodges, K. Debating Social Security: Understanding and Evaluating Perspectives on the Social Security Act of 1935. N.d. Web. 25 February 2016.
McKay, Alisa. The Future of Social Security Policy: Women, Work and A Citizens Basic Income. 2005. Routledge. Print.
Netter, Lorraine. Dependent and Spouse Benefits Under Social Security Disability. Nolo, 2016. Web. 24 February 2016.
PBS. Landmark Legislations. PBS, 2016. Web. 23 February 2016.
Social Security. Disability Benefits. Social Security Administration, 2016. Web. 23 February
Social Security. Historical Background and Development of Social Security. Social Security Administration, 2016. Web. 26 February 2016.
Social Security. Survivor Benefits. Social Security Administration, 2005. Web. 24 February 2016. https://www.ssa.gov/pubs/EN-05-10084.pdf.
Social Security. Retirement Benefits. Social Security Administration, 2016. Web. 23 February
SSMBT. A Summary of the 2015 Annual Reports. Social Security, 2015. Web. 25 February 2016.
