The implications and effects of privatizing social security : an honors thesis (HONRS 499)

In recent years, the idea of privatizing Social Security in the United States has been a popular reform solution. Privatizing Social Security already poses many questions as to whether or not this solution is the best one for our social insurance program. This paper addresses the issues of Social Security privatization and looks at both sides to analyze the varying viewpoints.The first chapter in this paper deals with Social Security's history in the United States as well as the answer to the question of how it is financed. When Social Security was put into action on August 14, 1935, it changed the lives of millions of Americans. With this new program, financial instability would become less of a threat for retirees and disabled workers. With the many amendments that have been made since 1935, Social Security has shown it can change with the needs of people relying on this program.The second chapter focuses on the current problems the Social Security program is experiencing as well as an overview of privatization. Many people believe Social Security is going broke. Certain indicators reveal the amount of current workers per retiree drawing Social Security benefits is greatly reducing. It is believed the Social Security trust fund will go broke in the year 2038. This is because outlays will have exceeded the revenue to the point of total exhaustion of funds. This is where the issue of privatization enters the picture. Many people believe privatization is the answer. Privatization is not a new concept to the world because many Latin American countries are currently operating their social insurance programs in such a way. Looking at privatization of other social insurance programs around the world is a big indicator of what a privatized system can do to the country's social insurance program and even the economy.The third chapter looks at the debate of whether or not a privatized Social Security program is feasible. There are many plans for privatization, most of which improve upon earlier suggestions. Some of the most recent privatization plans mirror those in Latin American countries where problems are already being seen. Those who are against privatization see this kind of reform as too radical. They argue that through such a system, the main thing messing is "security."The last chapter focuses on a conclusion and recommendation for Social Security's problems. It is obvious repercussions will take place if the United States imposes a privatized system because of the analysis of privatization in Latin America. My recommendation is to avoid privatization at all costs. There are other things that need to be done in order to keep Social Security alive. Equality in taxing for those making more than $72,600 a year is a key solution to some of the problems Social Security is having. My second recommendation is to increase the interest rates of government bonds. This will help create a surplus should it be needed in the future. My third recommendation is to prohibit governmental "borrowing" from the fund. This will help ease the problems that Social Security may have in the future.Honors CollegeThesis (B.?.