Social security reform Essay

Social security reform is a topic of considerable interest among decision-makers. As of 2011, a number of social security programs have been the subject of legislative discussions aimed at raising the ceiling on the national debt as well as cutting back on government spending. Discussions about the Social Security program are frequently held by the Joint Committee. The committee, however, was not in a good position to determine the statutory limit as of 2011. Therefore, within the policymakers’ negotiation plans, the current social security program changes are the main deficit reduction packages. The spectrum of the reform changes ranges from the minor activities of pay-as-you-go the 1930s social insurance system to the modernized redesigned program, which has the basis of personal investment and savings modeled after 401 (k) s and the IRAs. Proponents of these changes tend to cite different objectives of the policy with an aim of establishing equity and adequacy of the benefits that tend to have a good depiction of the philosophical views in relation to the social security program, as well the federal government provision of the income at the retirement age.

Latest projections as depicted by the Social Security Board of Trustees indicate that there will be an exhaust of funds as of 2033 and annual benefits income estimated at 75 percent as of this time. This is because of the prevailing demographics. When there is absence of the surplus governmental receipts, it is the role of the policymakers to execute the activities under three options, which are borrowing from the public, reduction of the expenditure, and rising of income or taxes.

History and mission

The mission of Social Security Agency is to enhance the economic security of the country citizens via vigilant and compassionate leadership in managing and shaping the social security programs of the America’s (SSA’s FY, 1998).

The agency began in 1935 as Americans were getting free from the economic depression depths. At this time, President Franklin D. Roosevelt engaged his fellow citizens in making a country promise to themselves, future generations and families that economic security of the nation had to be promoted via the establishment of the domestic program- Social Security. It is this promise, which forms a significant feature in the current social fabric of the organization. The life of the organization started as a Social Security Board, which was a new entity that did not even have a budget, facilities, or staff members.

The original personnel of this agency were donated by existing agencies where a temporary budget was received from the Federal Emergency Relief Administration and the Harry Hopkins. The assistant secretary was offered by Frances Perkins (Social Security, n.d). This includes the donation of the high-backed red-leather executive chair since SSB did not even have single furniture. The board was only comprised of three executives who were appointed by the President.

The independent status of the Social Security Board was lost in 1939 after the establishment of the Federal Security Agency (FSA) by the sub-cabinet level. FSA was composed of the U.S. Employment Service, the Civilian Conservation Corp, and Office of the Education, the Public Health Service, and the SSB. The 1946 President’s Reorganization Plan led to the rename of the SSB to Social Security Administration (SSA) (Social Security, n.d). The first commissioner of SSA was Arthur Altmeyer who had served as the SSB chairman. In 1953, President Eisenhower abolished FSA. His actions were followed by the creation of the Health, Education, and Welfare (HEW) department where SSA was included into this as a new agency for the cabinet (Social Security, n.d). In 1980, HEW received a replacement and it was renamed the Health and Human Services (HHS) department.

Since the colonial times, local towns and villages recognized the obligatory need of having a family assistance and effort, which is offered by friends and neighbors. This is because the aid provided was insufficient and it was carried out through workhouses and poor relief systems. There were gradual measures, which were adopted to increase the aid in organized manner by offering cash allowances to specific categories of people including the poor in society. The pension laws of the mothers enabled children who did not have paternal support to live in their homes instead of being taken into different institutions.

At this time, the Federal and State Government recognized the need of addressing some risks, which include economic industrialization, which was achieved through social insurance in the public welfare. As such, it was considered that contributory financing would enable the attainment of protection and assistance to all the people who were eligible for different benefits.

In the United States, as well as other industrial nations, the beginning point of social insurance was the compensation of workers. As such, a Federal law focusing on the coverage of the civilian employees in the government hazardous jobs was embraced in 1908. In 1911, the first state compensation law for the constitution was enacted. As of 1929, there were workers compensation laws in effect, except for four states. It is these laws that made it possible for the industry to be responsible in terms of costs of workers compensation or survivors when a worker was killed or injured in relation to her or his job.

Local and state government employees who include police officers, teachers and fire fighters are among the first to benefit from the retirement programs that began as early as 19th Century. There was also an early acceptance of the government for services and benefits provision among the individuals who worked in the Armed Forces. The main benefits for the veterans included compensations related widow’s pensions, war-disabled individuals, and land grants. There was a later emphasis on domiciliary care and service pensions. As from World War I, there was the provision of medical care benefits in full-scale system.

As such, the developmental process of the social welfare programs has been incremental and pragmatic. There are different proposals, which are formulated as a way of responding to specific problems and changes in the social security. Further, the social welfare policy has being decentralized significantly to achieve a given level of degree. The private sector also plays a significant role in the American social welfare programs development. This includes sickness payments and the provision of group life insurance.

The establishment of the social insurance program was a good thing on a national scale, which assisted the country in meeting the risks of old age and unemployment. The old-age benefits are provided to the employees who retire from their work environment. Unemployment and old age choice relates to the social insurance cost for the natural development. The programs created supplemented the incomes of people who could have a basic living, as well as the individuals who could not manage to have a basic living. Federal participation intent was the states encouragement for the adoption and embracement of these programs.

Other Federal grants were established by the law, which enabled states to strengthen and extend child welfare and health services, as well as maternal matters. However, the United States does not have a system of allowances for the family. However, workers who have children who are dependent are offered deductions on Federal income tax liability computation. Further, the working poor tend to obtain additional tax liability reductions. There is also the provision of free public education among all the children in the secondary schools.

Statutory authority

The statutory authority is the Congress, which enacts different laws (Social Security, 2017). An example of this the social security laws, which are compiled in accordance to the role of the commissioner, deputy commissioner, and other officers. A good link for these laws is the https://www.ssa.gov/OP_Home/ssact/title07/0702.htm

Rule making of the agency

The rule making process of social security agency is under the Commissioner (Social Security, 2017). As such, SEC 205. [42 U.S.C. 405] indicates that it is the Commissioner who has the full authority and power of making regulations and rules. These help in establishing procedures, which are appropriate or necessary to conduct different provisions. Further, the Commissioner has to ensure that the agency is able to adopt proper and reasonable regulations and rules on the provision and regulation of the extent and nature of the evidence, proof, and the methodology of taking and furnishing the same to other concerned parties.

The Commissioner also has the directions of establishing findings of decisions and facts to individual rights on different applications made on the same title. Thus, it is the Commissioner who has the mandate of making different decisions related to the unique payments, which have to be made in relation to different benefits. Applicant’s decisions are also settled by the Commissioner.

Social security is also bound to the regulations of section 7 of the privacy act. These indicate that it is not lawful for a local, State or Federal government agency to focus on denying a person any benefit, right or privilege offered by the law. Such is because individuals tend to refuse disclosing their social security account numbers. However, such is not applicable to where the federal statute requires a disclosure.

The Social Security Act has three sections, which gives the Social Security Commissioner broad statutory authority of issuing regulations. These are the 702 (a) (5) (title VII), 1631 (d) (1) (title XVI), and the 205 (a) (title II). There are also other additional sections in the same Act, which ensures that the Commissioner has the specific authority of issuing regulations on different topics. However, all these regulations, which are issued by the Commissioner, tend to be subjects to rulemaking procedures, as provided in the United States Code section 553 of title 5.

Further, the Congressional Affairs and the Legislation Deputy Commissioner Office has the mandate of being the focal point of the entire regulatory and legislative activity in the Social Security Administration. The main duties, which are performed, include the preparation of the officials of the agency who are expected to testify before the Congress. The coordination of the legislative proposals development, which are designed to improve the entire program. Establishing agency regulations, federal register notices, and social security rulings. And securing approval from the office of the budget and management in information gathering from all the public members.

Programs for the agency

According to SSA Publication (1997), the oldest income maintenance program in the U.S. is the social security. This is founded on the principles of social insurance and focuses on the replacement, in portions, the loss of income because of death, disability, or retirement. The coverage for the program is universal where there are over 96 percent of all the jobs in the U.S. being covered. Payroll tax is used as the method of financing this program by workers, which is levied by Self-Employment Contribution Acts and the Federal Insurance. The revenues are deposited in two trust funds, which are the Federal Disability Insurance Trust Fund and the Federal Old-Age and Survivors Insurance Trust. These are the ones that compensate for the operating expenses and benefits of the entire program.

The social security program is a vital income source for the retired individuals. At least, 3 out of 5 of individuals above 65 years are beneficiaries of this program (SSA Publication, 1997). It is also vital for the survivors of deceased employees. Thus, the program is able to ensure long-term protection of individuals with disability. The basic principles in the development of this program are work related, contributory, no means test, universal compulsory coverage, and rights clearly defined in the law.

The other program is the unemployment insurance. This was enacted in 1935 of the social security Act. It is a program, which is coordinated by the Federal-State. All the states have the opportunity of administering this program as it befalls the national guidelines included in the Federal law promulgation. The aim of this program is the provision of partial income replacement to members of the labor force who are employed, but become involuntarily unemployed. Workers have to register in a public employment office so that they can become eligible members for these benefits. Such employees should have prescribed employment amount, as well as earnings. They should also be able to work and be available for work (SSA Publication, 1997). In most of the states, this has the base period of the first 4 quarters. The worker receives weekly benefit amount, which varies in accordance to the past earnings and the state benefit formula. There is a ceiling established by all states on the maximum amount that an employee can receive from this program.

Unemployment benefits under this program are paid between the 1st and 39th week. The common duration for the number of weeks is 26 weeks. For employees who tend to exhaust their benefits within their normal program, they are eligible for additional benefits up to thirteen weeks. It is the labor department, which has the task, role and responsibility of ensuring that state unemployment insurance programs have the tendency of conforming to the existing federal requirements. Administration program funding and unemployment benefits are financed from workers taxes.

Another program is the workers compensation. All the states, Guam, District of Columbia, the Virgin Islands, and Puerto Rico have the laws, which focus on the compensation of the workers. There are additional programs, which cover, harbor, long shore, and maritime workers, coal miners, and federal employees (SSA Publication, 1997). These workers compensation laws tend to vary widely with respect to the total weeks under which the employee benefits are paid, as well as the payable benefits under each category. These programs are financed by the employers. This occurs under the principle that work accidents cost is part of the expenses incurred in the production process. Such costs tend to be influenced by the industry hazards and the methodology used for the liability insurance. Nevertheless, there are few state laws, which have provisions for nominal workers contributions for medical and hospital benefits.

Temporary disability insurance is often regarded as the sickness benefits. It offers workers with partial wage compensation in relation to the incurred losses because of no occupational disability. It is only five states, the railroad industry, and Puerto Rico, which have these temporary disability insurance laws. In 1942, Rhode Island was the first state, which enacted the temporary disability insurance. This was followed in 1946 by California, 1948 by New Jersey, and 1949 by New York (SSA Publication, 1997). The act establishes benefits systems, which ensures that people employed via the railroad industry had a chance of achieving success in their business activities.

Medicare is another vital program under social security. This is established under Title XVII of the Act of social security. Individuals are eligible for the protection of Hospital Insurance from the time when they attain 65 years. This is when they get social security benefits. People within the Railroad Retirement System also engage in the HI program on the same basis as those within the social security systems. All residential citizens also benefit from supplementary Medical insurance benefits.

Medicare is able to cover hospital services, hospice care, home health services, care in skilled nursing facilities, and physician services (SSA Publication, 1997). Other non physician services, which are covered, include flu vaccinations, durable medical equipment, clinical laboratory tests, diagnostic tests, ambulance services, blood, and health care services. However, Medicare is not able to offer coverage for long-term nursing care, hearing aids, dental care, patent medicines, routine physical checkups, routine foot care, cosmetic surgery, and routine foot care.

Medicaid program also provides medical and health related services for families and individuals who have low incomes through making direct payments to the suppliers of this service. Medical care has Medicaid as its main income source, which is related to the nation’s poorest people. There is an optional participation process, but the District of Columbia and all states should have Medicaid programs (SSA Publication, 1997). Puerto Rico, Guam, Virgin Islands, American Samoa, and Northern Mariana Islands needs to have this program. The program pain and policy of Medicaid exists as a joint endeavor. It is also established through regulations, Federal statues, and policies of independent states.

There is also a veteran’s benefits program. This program is focused on military veterans. It is based on the early days of the history of the nation. As such, it is able to offer pensions for all veterans who were disabled during the Revolutionary war. The involvement of the America in World War I triggered the creation of the several programs, which offered disability compensation, vocational rehabilitation, and life insurance. There were significant additions, which were obtained in 1944 because of the World War II GI Bill of Rights. These include the home loan program and the extensive educational benefits.

Social security also has the government employee retirement systems. This is where the Federal Government of the 50 states engages in a program for the provision of survivor, disability, and retirement benefits to all employees (SSA Publication, 1997). Majority of the jurisdictions also offer paid sick leave and medical benefits, as well as worker’s compensation plans. Further, Armed Forces members who have over 20 years service tend to get military retirement benefits, as well as medical care via the veteran’s affairs department.

In early 1930’s, during the Great Depression period, few of the elderly had any coverage on any retirement plan. For workers within the railroad industry had a better situation where 80 percent of the people were covered using specific private pension plan as formulated in 1927. However, such plans lacked adequacy level of demand as related to the general deterioration experienced in the conditions of employment of the 1930’s (SSA Publication, 1997). As the system of Social Security was under the stage of planning, workers of the railroad focused on having an alternative Railroad Retirement system as a means to broaden and continue with the current programs of the railroad within the uniform national plan. Consequently, there was an enactment of the registration in 1934, then 1935, and finally 1937, which ensured that the system of railroad retirement was completely different from the social security program.

In accordance to the principles of social insurance, the program of railroad retirement offers monthly benefits to disabled and retired employees, their survivors, and dependents of the deceased workers. The coverage under the system of Railroad Retirement has in the past experienced a decline. However, the benefit provisions for this program have had significant changes since 1937. It is the shrinking of the system of railroad, which led to the attainment of significant financial problems. The current system relies on a structure, which is based on the 1974 Railroad Retirement Act as depicted in the 1981 amendments, as well as the years that followed (SSA Publication, 1997).

In 1972, the Congress had a replacement of the categorical programs for the federal state for the disabled, blind, and aged with Federal Supplemental Security Income (SSI) program. This was administered by the SSA. As such, the benefit levels and the multiplicity of eligibility were ended by the creation of SSI, which is related to the assistance programs, which were provided at local and state levels. SSI became effective as from January 1974.

The program of SSI comprises of two parts: state supplementation of the federal payment and the federal program. Within the federal program, there is uniformity for the age of the eligibility requirements, as well as allowed resources and income limits (SSA Publication, 1997). The federal benefits payments also tend to be uniform in spite of the place where individuals live and the minimum payment for the same is guaranteed.

Temporary assistance for needy families (TANF) offers work opportunities and assistance to all families, which are needy. It was enacted as a replacement of the Aid to Families with Dependent Children program. TANF was established under the public law 104-193 that has strong work requirements, efforts for state maintenance and requirements, welfare for jobs recipients, support of the children and family support for guaranteed medical care and child care. However, there is a limitation that families do not have a chance of spending more than 5 years under TANF. Funding for the child care is offered to ensure that mothers have the potential of moving into jobs (SSA Publication, 1997). Women under welfare get a chance of continuing to enjoy the benefits. It is vital for states to have child support enforcement programs so that they become eligible for the TNF block grants.

The U.S. agriculture department offers needy families and children access to healthy diet. As such, food is sourced from distribution channels, which are under the assistance authorities of the farmers. There are 15 federal assistance programs for food and nutrition in the U.S. These programs are run in state-federal partnerships. This is where the federal government becomes responsible for all the food costs and administrative costs among all the states (SSA Publication, 1997). There is a need to ensure that FCS has the responsibility of the interpretation of the federal statutes with regard to program instructions and regulations, which help in establishing acceptable standards on program integrity.

Current issues

In the federal programs, social security is a major thing where social insurance system assists in the paying of benefits to the disabled or retired workers, families of the deceased employees, and family members of the working employees. As of September 2012, 65 percent of the beneficiaries are the retired workers while the disabled workers formed 16 percent (Nuschler, 2012). The other beneficiaries of the same are the spouses, survivors and children of the disabled and retired workers. In a current state, social security is able to cover approximately, 159.7 million employees.

The funding of the social security program is through payroll taxes, which are obtained from covered employees, employers of the employees, federal income taxes, and the obtained interest income from the fun investments of the social security trust. The social security tax revenues tend to be investment in interest-bearing federal government securities. The federal government securities are exchanged with revenues, which are deposited in the general treasury fund. Thus, the funds, which are used in paying the administrative expenses and the benefits of the social security, are obtained from the sale or redemption of the federal government securities as they are stored in the trust funds.

The trustees make a projection that there will be a positive balance of the trust funds to the year 2033 (Nuschler, 2012). This will create room for paying all the benefits on the basis of the existing law. However, after 203, the trust funds are projected to be exhausted, which implies that the operation of this program will be based on the existing social security tax revenues. This is where the pay will be 75 % of the benefits that exists in the current law of 2033, as well s the 73 percent of the 2086 benefits. Social security had a deficit of annual cash flow as from 2010 (Nuschler, 2012). As such, it is projected that the deficit of annual cash flow will continue up to 2086. The general revenues, which exist are the ones used in the redemption of the federal government securities, which exist in the trust funds. If the government receipts do not have any surplus, social security spending is paid by the raise of the taxes and income by the government, public borrowing, or reduction of the expenditure. Taking into account the trust fund income, it is projected that social security will have a surplus from 2012 to 2020 (Nuschler, 2012). The experience of annual cash flow deficits implies that this program will start relying on the interest, which is credited to trust funds as a means of meeting the annual costs of the agency (Nuschler, 2012). Such interest is depicted as special issue securities and does not have a representation of the financial resource in the federal government as existing in the outside sources.

A key cause of the shortfall of the agency funding is the demographic changes. As such, the life expectancy is expected to increase, the fertility rates are declining, and older society is emerging. Hence, between 2010 and 2030, it is expected that individuals who are aged above 65 will increase at a rate of 77 percent while the taxes of workers expected to finance additional benefits in the future will increase by 7 percent (Nuschler, 2012). Thus, the number of employees that will be involved in the support of the social security beneficiaries will decline from 2011 2.9 to 2.0 in 2035. Moreover, there are additional program design features, which are increasing the spending rate of the agency. As an example, social security elements benefit formula is indexed to have average growth on the wage, which has the outcome of increasing the value of initial benefits on monthly basis for all retirees. It is the wage indexing that helps in the replacement of the pre-retirement earnings.

The income rates are increasing at a relatively small rate. Over the entire period, it is expected that income rates will become stable and not change under the current law. Further, social security benefits taxation income is expected to have a gradual increase. Consequently, the public is expressing the view that the social security will not have be good value in the future. This is because the agency may fail to meet its long-term commitments and obligations. In the current years, it is expected that retirees can receive more benefits as compared to their contributions. It is because of this that reform efforts are being directed on this sector to ensure that social security has the potential of achieving its desired success level.

However, the Congress is not efficient in focusing on solving the problem of the social security. Further, there has being no any progress on how the implementation of the solution should occur. This has occurred in spite of having several options of solving the social security issue, which include the reduction of the benefits and revenue increase through taxation among others. The outcome of this is the attainment of the Congressional stalemate.

Web site address

The social security agency can be found under this website link https://www.ssa.gov/.

References

Nuschler, D. (2012). Social security reform: Current Issues and Legislation. Retrieved from:

https://fas.org/sgp/crs/misc/RL33544.pdf

Social Security. (2017). Compilation of the social security laws. Retrieved from:

https://www.ssa.gov/OP_Home/ssact/title07/0702.htm

Social Security. (n.d). Organization history. Retrieved from: https://www.ssa.gov/history/orghist.html

SSA Publication. (1997). Social security programs in the United States. Retrieved from:

https://www.ssa.gov/policy/docs/progdesc/sspus/sspus.pdf

SSA’s FY. (1998). Management’s discussion and analysis. Retrieved from:

https://www.ssa.gov/finance/1998/98md&a1.pdf