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A report on American economics

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A report on American economics

Most of the problems of the United states are related
to the economy. One of the major issues facing the country
today is social security.

The United States was one of the last major
industrialized nations to establish a social security
system. In 1911, Wisconsin passed the first state workers
compensation law to be held constitutional. At that time,
most Americans believed the government should not have to
care for the aged, disabled or needy. But such attitudes
changed during the Great Depression in the 1930's.

In 1935, Congress passed the Social Security Act. This
law became the basis of the U.S. social insurance system.
It provided cash benefits to only retired workers in
commerce or industry. In 1939, Congress amended the act to
benefit and dependent children of retired workers and widows
and children of deceased workers . In 1950, the
act began to cover many farm and domestic workers, non
professional self employed workers, and many state and
municipal employees. Coverage became nearly universal in
1956, when lawyers and other professional workers came under
the system.

Social security is a government program that helps workers and retired
workers and their families achieve a degree of economic security. Social
security also called social insurance (Robertson p. 33), provides cash
payments to help replace income lost as a result of retirement,
unemployment, disability, or death. The program also helps pay the cost
of medical care for people age 65 or older and for some disabled
workers. About one-sixth of the people in the United States receive
social security benefits.

People become eligible to receive benefits by working in a certain
period in a job covered by social security.
Employers and workers finance the program through payroll taxes.
Participation in the social security system is required for about 95
percent of all U.S. workers.
Social security differs from public assistance. Social security pays
benefits to individuals, and their families, largely on the basis of
work histories. Public assistance, or welfare, aids the needy,
regardless of their work records.
All industrialized countries as well as many developing nations have a
social security system. The social security program in the United states
has three main parts. They are (1) old-aged, survivors, disability, and
hospital insurance (OASDHI), (2) unemployment insurance; and (3)
workers? compensation.
This tax was to be taken from the payrolls of the nation's employers and
employees. The government felt that, like unemployment benefits, the
social security should be financed by those who got the greatest
benefit, those who worked, and were liable to need those benefits in the
A plan that would affect those only who had paid such a tax for a
number of years would have done those who were currently suffering under
the Depression no good at all. As a result, the social security plan
began paying out benefits almost immediately to those who had been
retired, or elderly and out of work, and who were unable, primarily
because of the depressed economic conditions, to retire comfortably. In
this way, the government was able to accomplish two objectives: first,
it helped the economy pull out of the depression, by providing a means
by which old people could support themselves and, by buying goods and
services, support others in the community ; and second, it showed the
younger workers of that time that they no longer had to fear living out
their retirement years in fear of poverty.
Therefore, the social security payroll tax has been used to provide
benefits to those who otherwise would have little means of support, and
as of this writing, there has never been a year when Social Security
benefits were not paid due to lack of Social Security income. (Boskin
Social Security benefits increased 142% in the period between 1950-1972.
not only the elderly, but many of the survivers, the widows and children, of
those who paid into the
Social Security system, have received social security checks. These
checks have paid for the food shelters, and in many instances the
college education of the recipients.
Unlike private insurance firms, the United States Government does not
have to worry about financial failure. Government bonds are considered
the safest investment money can buy-so safe, they are considered ?risk
free? by many financial scholars. (Stein p. 198) The ability of the
United States Government to raise money to meet the requirements of the
social security should be no more in doubt than the governments ability
to finance the national defense, the housing programs, the State
Department, or any of the other activities that the federal government
gets involved in.
By paying out benefits equally to all participate in Social Security-
that is by not relying so heavily on total payments in making the
decision to pay out benefits, the system is able to pay benefits to
people who otherwise may not be able to afford an insurance program that
would provide them with as much protection. One of the main reasons for
the government's involvement in this program, is its ability and its
desire to provide insurance benefits for the poor and widowed, who under
the private market, might not be able to acquire the insurance to
continue on a financially steady course.
The government, then, is in a totally ...

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