Running Head: Social Security1

Social Security: Need for Evaluation

Randall L. Noggle

SOC320: Public Policy & Social Services

Instructor Dr. Denise Orpustan-Love

6/16/14

2

Social Security has become a very popular issue with the aging workforce. This

popularity has grown in tandem with the burdens that are being placed on the financial

infrastructure of this public program. With over 40 million Americans age 65 and older and

capable of receiving full social security benefits, and the number scheduled to more than double

within the next 40 years to 89 million, it is clear that this issue will continue to grow in

popularity (Jameson, Kent, Lee, & Mather, 2013). As the general population gradually ages and

more and more people begin to collect social security benefits, it will become imperative that

policy reform occur. A tightrope is being walked between public opinion and policy actor

idealism. For some, especially the younger generations, social security’s sustainability is a

nonissue, whereas with the aging population it is a priority. There is a lot to be considered when

evaluating social security: the scope of social security is a nation-wide issue that is receiving

both public and political awareness. Policy actor views and public opinions are dictating the

evolution of this public program, the necessity of structural evaluation and adoption of

reformation, and the public opinion and viable options for the direction of this program.

First, let us start with what social security is and what it was intentionally created for. We

have to go back to a very outdated ideological viewpoint to see how significant of a public policy

social security is. Obviously, social security is a recent development in the history of our

country. It was not a necessity with the earliest agriculturally based society America was socially

governed by. In this original form of society, retirement wasn’t planned in the way Americans’

plan it today. The agricultural nature of this early society’s retirement was based on the

inheritance of land, which was eventually passed on to a person’s children through inheritance or

the assumed ownership of farm land.

3

This form of “planning” never initially included any concept of or reliance on public

policy or government interaction. This, however, changed due to the industrialization of society

and general shift from rural farm life to people moving towards and into cities to acquire more

gainful forms of employment. In the Journal of Economic Growth (2013), Caucutt, Cooley, &

Guner state, “…that industrialization combined with demographic shifts can account for the

dramatic change in the social insurance system in the United States” (Caucutt, Cooley, & Guner,

2013). This dramatic change merited a new form of policy to be created being as people were

now no longer adhering to the traditional “land as retirement funding” ideology where their

children were able to provide for them in nearly every facet of their retirement. The need for

public policy regarding a new structure for retirement became evident, and thus, social security

was born.

Much like any other form of public policy, evolution was essential for social security in

order to remain a viable and effective policy. Unfortunately, the changes that were necessary

have been very slow to be enacted from the very beginning and realization that the policy was no

longer fitting the needs that were presented. It nearly remained unchanged from its inception, and

many people were falling in the “cracks”. In the Social Security Bulletin, DeWitt states, “The

1950 legislation (like the 1939 legislation) emerged out of the recommendations of an advisory

council. The most dramatic provision in the new law raised the level of Social Security benefits

for all beneficiaries an average of 77 percent” (DeWitt, 2010). This is a drastic change is policy

that is nearly unheard of in this day and age. However, later in the same article, DeWitt states

further change in policy, “The 1954 amendments produced a major expansion of coverage—

bringing an additional 10 million workers into the system. This law extended coverage to most

remaining uncovered farm workers, selfemployed professionals, and state and local government

4

employees (on a voluntary group basis). Benefits were also increased an additional 13 percent”

(DeWitt, 2010). Clearly, there was a definite situation to be dealt with and basically, a partial

overhaul took place through these changes. It made some necessary changes to become more

relevant to social need.

While these changes were fairly broad and essentially pertained to inclusion of the

uncovered individuals into program and increasing the benefit amounts, there were also more

integral changes that took place. In the Harvard Journal on Legislation (2013), Gokhale goes on

to give a brief description of those integral changes, “Survivor, dependent, and child benefits

against the loss of income from old age (or loss of the primary Social Security benefit recipient)

were added in 1939. Benefits to disabled workers were introduced in 1956. The early retirement

age was introduced for women in 1956 and for men in 1961…” (Gokhale, 2013). All of the

changes that took place, both regarding inclusion and specific entitlement, were absolutely

necessary to maintain policy effectiveness.

This brings us to how pervasive social security is in society as a direct result of the

aforementioned policy changes. In the Harvard Journal on Legislation (2013), Gokhale goes on

to explain that under the current laws, over 95% of professions are covered under the policies of

social security (Gokhale, 2013). This is a far cry from the initial very low percentage of

coverage. Paying into social security is done by a great majority of individuals. Everyone from

the 16 year-old part-time worker to the nearly retired career individual has been or is paying into

the program. We are all allowed to draw upon social security after reaching, at the very

minimum, age of 62. However, while we are allowed to decide when to start begin collecting

social security benefits, paying into the program is statutory, and we are not afforded the option

to decline payment.

5

This statutory payment is hardly noticed by the general public and most in the private

sector. However, there is much ado by policy actors regarding this minute amount of money that

is being paid by nearly every individual. There is a lot of number-crunching being done by those

involved in this policy, whether in private or public actor roles, to understand how to deal with

the demands being placed on this program by an aging population. Policy makers involved with

the financially stability and sustainability of this program are in debate of viable remedies to the

current policy as well as trying to formulate supplemental and also alternative methods to what

may possibly be the demise of social security as we know it.

While all the previous policy changes in social security have included both more people

into the program and have also entitled those people to better benefits as a necessity to the ever-

increasing financial demands of retirement, further change is becoming more of a pressing issue.

The previous changes no longer carry the same overall beneficial effect they once had. In the

Social Security Bulletin, Goss states, “Since the last major amendments to the Social Security

program were enacted in 1983, the annual reports have presented a succession of developments

in the actual experience of the economy and the program benefits that show a need for more

change to address the future challenges we face” (Goss, 2010). No major changes in policy in

over 30 years is beginning to take its toll on the financial infrastructure of social security and

lack of policy evolution or alteration is becoming a social need.

The baby boomers play a major role in this desperate need for change. While it was

known that this generation had an incredibly high birth rate, it was impossible to predict that

medical advances would be prolonging active life with additional functional years, incurred

health costs, and also, the drop in birth rates of subsequent generations. Social security will

shortly be unable to sustain itself as the baby boomer generation has already started to collect

6

benefits. The public is becoming very aware that the balance is in the beginning process of

shifting from functional to dysfunctional in regards to social security’s ability to provide for

those of retirement age. It is in social security’s benefit that many of the policy actors involved in

social security reform are part of the baby boomer generation, whom these changes must be

made for in order to accommodate to.

Social security reform is a must, and is a topic of great debate. No changes have been

made in three decades and the system is showing signs, given supporting societal factors, of

eventual failure. The biggest issue of reform is not that it needs done, to the contrary, that is a

general consensus in both the private and public sectors. The issue lies in how and what must be

done regarding change. The changes that are being discussed regarding policy reform in order to

keep social security sustainable are privatization, partial privatization coupled with minor benefit

allocation, and delayed claiming.

The first major idea is privatization of social security. Although privatization is

considered a viable option for the wealthier of policy actors, the realities of it entail a more subtle

approach. In the Journal of Financial Service Professionals (2012), Koleva states, “Full

privatization is viewed by some as a drastic measure fraught with risk and uncertainties. There

have been proposals that offer a more balanced package consisting of a combination of partial

privatization, reduction of benefits, and increase in tax revenues under the current Social

Security system. Based on past experience, such proposals would most likely be able to stabilize

the current Social Security system and ensure its solvency for a longer period of time” (Koleva,

2012). Full privatization seems like a very risky proposal because it places an individual’s

retirement solely as a result of their planning and limits government’s role of responsibility of

the social health of its citizens. This concept is not going over too well with a good majority of

7

policy actors involved because, in essence, it is harshly limiting our citizen’s “safety net” in

retirement, and thus, is very unlikely and those involved are straying away from this idealism.

Partial privatization is the preferred concept and idealism to be supplemental help to the

crumbling system currently in place.

In addition to this partial privatization, delayed claiming of social security can be an

effective alternative for both the public and private sector. In the Journal of Financial Planning

(2014), Shoven & Slavov suggest, “recent low real interest rates combined with improved

mortality and concluded that delaying Social Security is actuarially advantageous for most

individuals. In addition, the delayed retirement credit (the adjustment for delaying Social

Security beyond full retirement age, which was 65 for those turning 62 in 1992, and has risen to

66 for those turning 62 today) has become much more generous” (Shoven & Slavov, 2014). If

the current social security system were to employ the ideas and proposals expressed of partial

privatization coupled with decreased benefits and delayed claiming, many of the financial woes

of social security may be able to be delayed until a more suitable remedy is found.

This would be a massive change in the structure of social security, and would be a far cry

from what is currently in place. Full privatization seems too risky, but doing nothing leads to a

much sooner than anticipated collapse. No one wants to pay more into taxes, but it may be a

necessary evil in order to prevent elderly poverty. Also, by delaying claiming benefits,

individuals would be both helping themselves and also giving our policy makers more adequate

time to come to a reasonable solution. To the younger generation social security reform is not

nearly as pressing as such other political debates such as Gay Marriage, Gun Rights, Educational

Reform, etc. But it ought to be because it affects not only the elderly or those of retirement, but

8

also their future. At any rate, this issue has been acknowledged by society in general as well as

policy makers as requiring evaluation and reform on some level.

Social security, or the system as we know it, is heading towards imminent financial

failure. While the course of 40 years may seem like a long time, it is not in the policy making

process. It has been over 30 years since the last major change in policy, and both the financial

situation and increase in those who are collecting benefits have both changed in ways that were

never initially planned. The public opinion of this issue simple enough: something needs to be

done. It is very similar in the political realm, but there are a great deal of factors to be considered

with any policy change, let alone something as pervasive as social security. This is a public

policy in which the amount of public and political awareness will continually grow as the

population ages and begins collecting and there simply is no other option but to evaluate and

change current policy. There are numerous factors to consider when viewing social security: the

nation-wide level of participation in both the public and political realms, the evolution of this

program through policy actor involvement, structural evaluation and reformation and the public

view of the viable options or alternatives to the current program.

9

References

Caucutt, E. M., Cooley, T. F., & Guner, N. (2013). The Farm, the City, and the Emergence of

Social Security. Journal Of Economic Growth, 18(1), 1-32. doi:http://dx.doi.org.proxy-

library.ashford.edu/10.1007/s10887-012-9086-5

DeWitt, L. (2010). THE DEVELOPMENT OF SOCIAL SECURITY IN AMERICA. Social

Security Bulletin, 70(3), 1-26.

GOKHALE, J. (2013). SOCIAL SECURITY REFORM: DOES PRIVATIZATION STILL

MAKE SENSE?. Harvard Journal On Legislation, 50(1), 169-207.

Goss, S.C. (2010). The Future Financial Status of the Social Security Program. Social Security

Bulletin 70(3). Retrieved from

http://www.ssa.gov/policy/docs/ssb/v70n3/v70n3p111.html.

Jacobsen, L.A., Kent, M., Lee, M., & Mather, M. (2013). America’s Aging Population.

Population Reference Bureau. Retrieved from

http://www.prb.org/Publications/Reports/2011/americas-aging-population.aspx.

Koleva, Y. (2012). The Outlook for Social Security Reform: Proposals and Implications. Journal

Of Financial Service Professionals, 66(3), 26-31.

Shoven, J. B., & Slavov, S. (2014). Recent Changes in the Gains from Delaying Social Security.

Journal Of Financial Planning, 27(3), 32-41.