social security student economics association：社會保障學生經濟學協(xié)會

1、SEA at ASU Student Economics AssociationStudent Economics Association What is Economics? Economics is a social science concerned with the logic of scarcity, costscarcity, cost, value, and choice Economics is notnot all about money, math, and numbers Money is just a medium of exchange; it is not a pr

2、oductive resource. Does the system really need changing? 1935 Franklin Delano Roosevelt signs Social Security Act in the Cabinet Room of the White House. Golden Years: 1940 - 1975 Ida Mae Fuller collects social security checks for 35 years (until age of 100) receiving $22,888.92 after paying $24.75

3、over a three-year period. SS Check #00-000-01 - $22.54 1. Do you need the government to force you to save for your retirement? Does anyone? 2. Do “we”, as a society, have a responsibility to care for those who have not prepared for their retirements? 3. Do you think you will ever receive social secu

4、rity benefits? 4. Should the “rich” help pay for the retirement of the less fortunate? To what extent? Federal Insurance Contribution Act (FICA) Payroll Taxes: 15.3% of Earned Income Employee pays 6.2% for SS 1.45% for Medicare Employer pays matching funds Earnings “cap” of $90,000 (maximum tax of $

5、11,160) All of this (and more) is spent as it comes in. There is no special account where social security contributions are earning interest. You do have a social security “account”: a computer entry of what you have contributed, how much the government “owes” you, and when you can start collecting

6、it. Future taxpayers own future retirees a LOT of money. Statistical projections of all those IOUs add up to about $2 Trillion. In 2006, total social security tax receipts will more than cover payments to retirees. Over the next 60 years, projected payments will exceed social security taxes by about

7、 $7 Trillion. Federal Outlays, 1962 to 2001 (As a percentage of GDP) “Baby Boomers” Are Retiring “Your turn” to retire Choices Try to fix the current system: tinker with taxes and benefits “Privatize”: continue forced savings, but but create personal investment accounts accounts (with some federal r

8、egulation). Terminate social security: pay off obligations, but government stops administering saving and retirement benefits. Proposals to “fix” Social Security Raise the retirement age Raise the income cap on the Social Security portion of FICA Raise the FICA tax rate for Social Security Reduce sc

9、heduled benefits Changes the definition of a retiree Reduces the number of retirees Reduces the number of years retirees will be paid benefits but this must be phased in slowly and will take a long time to implement fairly Raising the Retirement Age Raising the Income Cap Increases taxable income In

10、creases tax revenue Makes payroll tax less regressive Retirement System OR Welfare System ? Duh ? Raising the FICA tax rate More Regressive Fewer Jobs Laffer curve effects Reduce Scheduled Benefits Reduces Obligated Payments Closes Gap Between Workers Payments and Retirees Receipts Default on Obliga

11、tions ! Privatization: Pros & Cons Establishes private accounts, With (same old) forced savings Allows for investment of savings to earn interest on money Personal control is two-edged sword: lack of investment expertise raises significant risk of loss. More freedom More personal responsibility Pay out current obligat