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1 CONTROVERSIES I Social Security Debra A. Miller, Book Editor GREENHAVEN PRESS A part of Gale, Cengage Learning / # GALE % CENGAGE Learning- Detroit New York San Francisco New Haven, Conn Waterville, Maine London

2 Contents Foreword Introduction Chapter 1: Is Social Security Going Bankrupt? Chapter Preface Yes: Social Security Is Going Bankrupt Social Security Is Going Broke Paul Ryan Social Security began operating at a deficit in 2010 because not enough current workers pay the benefits of retirees. This continuing problem will result in beneficiary cuts unless the government reforms the program now, but not by raising taxes. The Social Security Trust Fund Will Be Exhausted in 2033 The Board of Trustees, Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds The Social Security trust fund will exhaust its assets in To keep Social Security solvent, lawmakers should make changes as soon as possible, such as increasing the payroll tax rate, reducing benefits, finding new revenues, or enacting a combination of these options. Social Security Goes Bankrupt John Hayward In 2011, Social Security paid out more in benefits than it collected in taxes. There is no trust fund to cover the difference, because American liberals have been raiding it to pay for other big government spending. No: Social Security Is Not Going Broke Social Security Is Not Going Broke David Cay Johnston

3 Social Security showed a $2.7 trillion surplus at the end of Projected benefit cuts in 2033 can be avoided through a combination of policy changes, such as increasing the income cap on which Social Security taxes apply, and improvements in the US economy. Social Security Does Not Have Serious Financial Problems Jane Bryant Quinn Those who attack Social Security spread many myths, such as the program is going bankrupt. Even if no action is taken, benefits would continue at a reduced level of about 77 percent. Young people should not opt out of Social Security, but the system needs to be fixed. It Is Impossible for Social Security to Go Bankrupt John T. Harvey Social Security cannot run out of money because it is an immediate transfer from current workers to retirees each year. It is economic productivity, not the size of the Social Security trust fund, that determines how the system will work. As such, the key to preserving Social Security is to continue the growth in worker productivity in the decades ahead. Chapter 2: Is Social Security a Successful Government Program? Chapter Preface Yes: Social Security Is a Successful Government Program Social Security Is One of the Most Successful US Domestic Programs Center on Budget and Policy Priorities For seventy-five years, Social Security has provided a guaranteed source of retirement income to elderly Americans, protected disabled workers, and lifted millions out of poverty. Modest changes to the tax rates for the very rich and adjustments in benefits would protect Social Security through future decades. Without these changes, some benefits may need to be reduced after the Social Security trust fund is exhausted.

4 Social Security: A Target Without a Cause 60 David R. Francis Republicans in Congress want to cut Social Security or privatize it; however, for many elderly Americans, Social Security is their only source of income, making it the country's most effective anti-poverty program. Social Security Is One of the Best Tools 63 for Fighting Poverty Around the World Claire Provost A 2011 United Nations report found that social security programs are the best way to attack poverty and inequality in developing countries, and the cost of such programs is quite low. Social Security Is Not a Ponzi Scheme 67 Los Angeles Times Texas governor Rick Perry has called Social Security a Ponzi scheme that will not benefit young workers, but this claim is based on a misunderstanding. Social Security is more like an insurance program than a retirement savings account, and it would require only minor adjustments to fix the longterm health of the program. No: Social Security Is Not a Successful Government Program Social Security Is Similar 71 to a Ponzi Scheme Michael Tanner Social Security resembles a Ponzi scheme in many ways. Because of demographic changes, today's workers will pay higher taxes and receive lower benefits at retirement than currently projected by Social Security. One way to avoid this outcome is to allow workers to invest a portion of their Social Security taxes in private retirement accounts. The Outcome for Social Security 83 Is the Same as a Ponzi Scheme Lower Future Benefits Chuck Saletta

5 Ponzi scheme or not, Social Security will not be able to pay today's level of benefits to future retirees. Current workers should prepare for this shortfall, and there are four ways to do so. Social Security Is a Mandatory Ponzi 87 Scheme That Is Bad for American Workers Julie Borowski Social Security is like a Ponzi scheme because it transfers money from current workers who pay into it to retired workers who paid into it earlier. But unlike a Ponzi scheme, Social Security is mandatory; it forces younger workers to pay benefits that they themselves will never receive. Chapter 3: Would Private Retirement Accounts Be Better than the Current System? Chapter Overview 91 Joe Messerli Allowing workers to invest part of their Social Security contributions into private accounts might yield higher returns, but poor investment decisions or a large market downturn could leave some workers worse off when it comes to retirement. Yes: Private Retirement Accounts Would Be Better than the Current Social Security System Personal Savings Accounts Would Provide 101 Real Reform for Social Security Dan Mitchell Personal savings accounts would solve both crises facing Social Security its unfunded liability and its burden on younger workers. Advantages include reduced government spending, more jobs, and greater private savings. These outcomes have already been seen in other countries that have privatized a part of their social security program. Private Retirement Accounts 104 Would Produce Much Higher Returns than Social Security William G. Shipman and Peter Ferrara

6 President Barack Obama has called Republican proposals for private Social Security accounts ill-conceived. But even if invested conservatively, private accounts would give workers much higher returns than Social Security. People should have the choice to participate in Social Security or to invest that amount of their earnings in privately controlled investment accounts. Personal Retirement Accounts Would Be 107 No More Risky than Social Security Michael Tanner Opponents of personal retirement accounts argue that the stock market is too risky and too volatile. However, Social Security is not without risk, and its fiscal problems will likely result in reduced future benefits. Any helpful discussion of Social Security reform must include options for private investment of some portion of the Social Security tax. No: Private Retirement Accounts Would Not Be Better than the Current Social Security System Social Security Is a Wage 114 Replacement Insurance Program, Not an Investment Program Nancy J. Altman Many myths have been spread about Social Security. Unlike private retirement accounts, Social Security spreads the risk like insurance and provides benefits other than retirement, including life and disability insurance. The 2008 views of then-president George W. Bush regarding Social Security would undo the great social reform work Franklin D. Roosevelt accomplished in Privatization Would Dismantle 119 Social Security and Offer No Guarantees of Future Benefits National Committee to Preserve Social Security & Medicare Privatization of Social Security would result in benefit cuts, worsen the program's fiscal problems, and undo its important insurance protections all without offering any guarantees of better future benefits.

7 Private Retirement Plans Could Not 124 Provide the Same Benefits That Social Security Does Louis Woodhill The public views Social Security favorably because it provides a package of benefits that no private investment company could offer. Instead of pushing privatization, Republicans should work to increase economic growth to save Social Security. Chapter 4: How Should Social Security's Fiscal Issues Be Fixed? Chapter Preface 130 Raising Eligibility and Retirement 134 Ages Would Be One Way to Reduce Future Fiscal Imbalances in Social Security Congressional Budget Office Raising the eligibility ages for Social Security and Medicare and raising the full retirement age would reduce spending to help prevent unsustainable federal debt. However, this would delay benefits, cause some people to go without health coverage, and lead people to work longer. Social Security Should Be Strengthened by 137 Removing the Cap on High Incomes Bernie Sanders Congress should strengthen Social Security simply by raising the cap on income subject to Social Security taxes. That cap is currently set at $106,800, and it ought to be raised to $250,000 or higher. Doing so would maintain a program that is essential for our future. Want to Fix the Economy? Start With 141 Social Security Peter Diamond Fixing Social Security would be a good place to start in order to improve the nation's economy and address the federal debt. A combination of additional revenues and decreased benefits would make the program sustainable.

8 A Mix of Minor Changes Would 146 Fix Social Security Philip Moeller Social Security must be protected from unnecessary cuts, but a series of gradual reforms of the program's taxes and benefits will help preserve this important program for the future. Social Security Benefit 149 Cuts Should Be Concentrated on High-Income Beneficiaries Allan Sloan Borrowing billions of dollars to pay for Social Security benefits is unsustainable. Benefit cuts should focus on wealthy, not low-income, beneficiaries because poor Americans rely often exclusively on Social Security benefits to survive, whereas for rich Americans Social Security benefits are far less important. Social Security Reforms Must Achieve 153 Both Solvency and Modernization Howard Gleckman Life expectancy, work, and family have changed since the 1930s, and Social Security is not structured for modern needs. Congress should increase contributions and reduce benefits for high-earners while protecting lowincome beneficiaries. Organizations to Contact 156 Bibliography 160 Index 165

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