May 5th, 2006 16:25 EST
Under the provisions of the Social Security Act of 1935, the government would be responsible for taxing income of all working Americans in order to provide them with public benefits and other programs.
Based on the information released by the White House, in 13 years from now the government will have to pay out more Social Security benefits than it collects in payroll taxes. Considering that in 2005 the assistance accounts for over 20% of the federal budget, when the baby-boomer generation retires a lot more people will begin collecting benefits and the predicted shortfall will become more evident with the lack tax money to support them. That`s why almost all political parts agree that the Social Security reform has to occur soon although the opinions are contrasting when it comes to President Bush`s proposed privatization of the system.
Despite the claims by Democrats that Bush administration created the so-called crisis in the social security system in order to pass their own political agenda to the public in the form of hysteria, numbers have been the strongest evidence of the real crisis in the system. The baby-boomer issue is not the only problem facing the future of the budget regarding Social Security. The population growth is projected to slow over the next several decades.
Consequently, the rate of population growth is anticipated to lower making older groups and retirees a very large percentage of the population. The percentage of labor forcer will evidently decline as the average age increases. All of this will unquestionably affect the amount of Social Security taxed collected each year due to the decrease for taxpayers. Some projections indicate that the Social Security crisis can affect public benefits for the next 80 years. Therefore, the impact will go far beyond the baby boomer generation.
When Clinton announced the Social Security crisis during his administration one of his three proposed resolutions was the partial privatization of the system as well. At that time, Democrats were not denying the existence of a crisis in the system. Aside any political agenda, the essential focus today should be on the real issue that indicates that if the Social Security reform does not occur, the baby boomer and future generations may see their benefits vanish.
In essence, arguments over Social Security reform have divided groups because of the trust vested on money invested Â" in the public sector and the worry of shifting to the private capital markets. In reality, it might take more than just one simple solution to fix and prevent a major crash in the fragile Social Security system.
Note: The author of this article is no longer affiliated with theSOP.