OPPapers.com

Social Security

President George W. Bush is lying to the citizens of the United States of America when he says, "'By the time today's workers who are in their mid-20s begin to retire, the system will be bankrupt.” “So if you're 20 years old, in your mid-20s and you're beginning to work, I want you to think about a Social Security system that will be flat bust, bankrupt.'" The truth is that while Social Security could use a tweak, it will not be bankrupt when Americans retire. But the president will say anything and do anything, because he wants to implement a plan that will cut benefits and leave American citizens paying 25% of savings to plan administrators. It's not stupidity, but greed at work in the white house.
Social Security is funded by a payroll tax. When Americans make wages, 6.2% is taken out of paychecks to go to Social Security and an additional 6.2% is matched by employers. This then stops after the first 90k of income for each person. In a perfect year, the Social Security beneficiaries would need exactly as much money as paid in taxes. However, most of the time, the amounts are unequal. When the baby boomers retire, they will require more money than the payroll tax generates, so to make up for this, the American government has years where it generates more in payroll taxes than it needs to spend on beneficiaries. This excess goes into a Trust Fund. The Trust Fund grows each time there is a yearly surplus. Later, when there are years where the beneficiaries require more money than the payroll taxes provide, the government can take money from the Trust Fund to make up the difference. But what does the government do with this money? It spends it. That is theoretically okay if the intention is to pay it back later, but that is not the government’s intention. The Bush Administration is saying that when beneficiaries require more money than payroll taxes generate, in 2018 or 2028, that they will not be able to afford it. This basically means that the Bush Administration...