This academic paper titled Economics: The American Government has a total of 2048 words and 11 pages.
Economics: The American Government
Economics: The American Government
Most of the problems of the United states are related to the economy. One of the
major issues facing the country today is social security.
The United States was one of the last major industrialized nations to establish
a social security system. In 1911, Wisconsin passed the first state workers
compensation law to be held constitutional. At that time, most Americans
believed the government should not have to care for the aged, disabled or needy.
But such attitudes changed during the Great Depression in the 1930\'s.
In 1935, Congress passed the Social Security Act. This law became the basis of
the U.S. social insurance system. It provided cash benefits to only retired
workers in commerce or industry. In 1939, Congress amended the act to benefit
and dependent children of retired workers and widows and children of deceased
workers . In 1950, the act began to cover many farm and domestic workers, non
professional self employed workers, and many state and municipal employees.
Coverage became nearly universal in 1956, when lawyers and other professional
workers came under the system.
Social security is a government program that helps workers and retired workers
and their families achieve a degree of economic security. Social security also
called social insurance (Robertson p. 33), provides cash payments to help
replace income lost as a result of retirement, unemployment, disability, or
death. The program also helps pay the cost of medical care for people age 65 or
older and for some disabled workers. About one-sixth of the people in the United
States receive social security benefits.
People become eligible to receive benefits by working in a certain period in a
job covered by social security. Employers and workers finance the program
through payroll taxes. Participation in the social security system is required
for about 95 percent of all U.S. workers. Social security differs from public
assistance. Social security pays benefits to individuals, and their families,
largely on the basis of work histories. Public assistance, or welfare, aids the
needy, regardless of their work records. All industrialized countries as well as
many developing nations have a social security system. The social security
program in the United states has three main parts. They are (1) old-aged,
survivors, disability, and hospital insurance (OASDHI), (2) unemployment
insurance; and (3) workers\' compensation.
THE SOCIAL SECURITY PAYROLL TAX
This tax was to be taken from the payrolls of the nation\'s employers and
employees. The government felt that, like unemployment benefits, the social
security should be financed by those who got the greatest benefit, those who
worked, and were liable to need those benefits in the future.
A plan that would affect those only who had paid such a tax for a number of
years would have done those who were currently suffering under the Depression no
good at all. As a result, the social security plan began paying out benefits
almost immediately to those who had been retired, or elderly and out of work,
and who were unable, primarily because of the depressed economic conditions, to
retire comfortably. In this way, the government was able to accomplish two
objectives: first, it helped the economy pull out of the depression, by
providing a means by which old people could support themselves and, by buying
goods and services, support others in the community ; and second, it showed the
younger workers of that time that they no longer had to fear living out their
retirement years in fear of poverty.
Therefore, the social security payroll tax has been used to provide benefits to
those who otherwise would have little means of support, and as of this writing,
there has never been a year when Social Security benefits were not paid due to
lack of Social Security income. (Boskin p.122) PAYING
OUT BENEFITS Social
Security benefits increased 142% in the period between 1950-1972. not only the
elderly, but many of the survivers, the widows and children, of those who paid
into the Social Security system, have received social security checks. These
checks have paid for the food shelters, and in many instances the college
education of the recipients.
Unlike private insurance firms, the United States Government does not have to
worry about financial failure. Government bonds are considered the safest
investment money can buy-so safe, they are considered "risk free" by many
financial scholars. (Stein p. 198) The ability of the United States Government
to raise money to meet the requirements of the social security should be no more
in doubt than the governments ability to finance the national defense, the
housing programs, the State Department, or any of the other activities that the
federal government gets involved in.