Policies to Save Social Security

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The Social Security Trust Fund is critical to the American economy because it protects the elderly from poverty. However, the reduction in the proportion of working-age Americans to retirees has put the scheme under financial pressure (Lam, 2016). The initiative has been running in billions of dollars of deficits, and analysts believe that if appropriate measures are not implemented, the funds will be exhausted. There are two legislative choices for stopping the social security scheme from going bankrupt. These tactics include rising sales while decreasing rewards.
Growing funding for the social security net will necessitate a tax cut or the removal of a cap on earnings. Increasing the security payroll taxes can result in increased revenues to keep paying out the promised benefits. The raised taxes would help to cover the cost due to social security. Raising the taxes by 2% from its current 6.2%for both employer and employee would make the program solvent for the 75 years (Lam, 2016). Even though raising social security taxes would not increase the benefits provided, it would maintain it so that all those who uses it can continue to enjoy the benefits. Besides, eliminating earning caps can help to keep the social security fully funded. With the increased wealth of American, most of the wealth escapes the social security tax. Therefore, one solution to funding issue is to keep the 12.4% tax rate and eliminate caps on earning. The policy would ensure that the wealthy pay more into the social security programs

The policy makers could also opt to change the social security benefit formula to reduce the size of remuneration to the beneficiaries. Cutting the benefits by 17% would make the program last for the next 75 years. However, it would harm workers who are approaching retirement and are looking forward to the promised funds (Lam, 2016). One way to reduce the benefits is to increase the retirement age so that future retirees could get smaller payouts. The approach of cutting the payout benefits would help to keep the system solvent but would not eliminate the problem. The policy option is not favorite among many because of its significant impact on the low and middle-income persons.

2. Funding, racial and economic status in education

In the two landmark cases of Fiscal Equity vs. State of New York and that between Paynter vs. State of New York the importance of funding for education is clearly brought out (Fowler, 2006). In the first case between Fiscal Equity and New York State, the New York school are underfunded by the current system, and this denies the students’ rights to access quality education. The cost of running educational institution is high, and the majority of families cannot adequately afford such high cost. The school requires funds to construct modern and adequate teaching facilities such as modern classrooms as well as libraries. They also need funds to ensure that students learn in a suitable environment with necessities such as clean water. All these projects require massive capital outflow. However, since public institutions cannot afford the need cost, the student fails to get a quality education (Fowler, 2006). Besides, the absence of state support means most students would not attend schools, and therefore they would not get the opportunity to learn. The result would be denying them the fundamental right to education.

In the second case between Paynter and State of New York, the policies of the states led to a large number of racial minority and poverty in the school districts (Fowler, 2006). The less support to African- American student’s schools or the racial discrimination could result in denial of student’s right to equality and quality education. The segregation regarding economic status could also lead to discrimination in the provision of schooling. The states should ensure that all students irrespective or race or economic status receive a quality education. The state should ensure that students from all racial backgrounds receive adequate physical facilities such as classrooms instrumentalities such as desk, textbooks, and chairs (Fowler, 2006). The objective of the State of providing quality education would be to reduce the differences in economic status or ethnic inadequacies that might arise in a different learning institution.

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Fowler, J. (2006). Education as a civil right: The ongoing struggle in New York. Educational Studies, 40(1), 39-59.

Lam, B. (2016, April 5). How Can the U.S. Salvage Social Security? Retrieved from https://www.theatlantic.com/business/archive/2016/04/social-security/476331/

August 18, 2021

Business Government

Subject area:

Tax Stress Social Security

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