The Pros And Cons Of Social Security Reform

Social Security was born on August 14, 1935, when the Social Security Act was signed by President Franklin Delano Roosevelt. When Franklin Delano Roosevelt signed the Social Security Act it was designed to prevent families from going into poverty and act as a cushion for any unexpected losses of income. Social Security is a program that everyone that wishes to participate is involved. Everyone that is legally a citizen or resident and has requested a Social Security number either when they were born or naturalized are involved. Every citizen or resident receives a nine digit Social Security number. Getting Social Security numbers are not mandatory. The Social Security Administration creates incentives for people to get their numbers, as it is needed to …show more content…
Social Security is funded by FICA payroll taxes. Anything left over after paying beneficiaries is put in trust funds. There are two funds, the biggest one is the Social Security Trust Fund and other one is the Disability Insurance Trust Fund. In 2010, the social insurance ran a deficit and had to resort to the trust funds to cover the portion that was not covered by payroll taxes. When Social Security runs a deficit, it means that payroll taxes collected are not enough to pay beneficiaries. According to economists the problem is only going to get worse, if no reformation is made the consequences are permanent deficits. The Disability Insurance Trust Fund is expected to go insolvent in 2016, and the Social Security Trust Fund is expected to go insolvent between 2033 and 2037. When the trust funds deplete beneficiary’s benefits will be cut by 25% if no reform is made. When the program runs a deficit it is bad for the economy. Deficits contributes to the public debt, the money needed to cover the rest of uncovered scheduled benefits is covered by drawing down interest payments from the U.S. Treasury on previous Trust Fund