The Problem and its Origin Essay Example for Free

The Problem and its Origin EssayThere was a time in the 20th century when the primary start of income of the people in the United States was farming. It was also during that time when the brass provided economic security to the extended families. This lasted for familys until they experienced Great Depression which diminished the lifetime savings of the successiond and at the same time reduced the gainful vocation opportunities. This was the reason why they experienced national crisis and it was because of this issue that the affectionate surety develop programs to address the issue. (http//waysandmeans. house. gov/media/pdf/greenbook2003/Section1.pdf) To address this problem, the Federal government granted loans to the state people and the loans were remunerative through direct relief or work relief. With this, the government came up with programs for emergency relief and public works. The president of the state submitted a proposal to the congress about an insurance p rogram. This law included the establishment of 2 insurance programs the Federal administration of ageing age which was intended to help the retirees who had once been employed in the industry and commerce and the Federal State System which intended to address unemployment insurance issues.The law which was enacted by the federal government served as a supplement to the incomes of the state people who were not legal for Social protection Survival Insurance. There was a time in the past when over 33 million people were covered by the Social credential system. Though coverage was obligatory for most of the doers, there were still about 6. 5 million doers who did not enjoy the coverage under Social Security in 2002. It was not until 1990 when the character was replaced with a newer system which was intended to be fair between the employed and the self-employed individuals.Under this new system, there was an margin of the SECA tax to reflect that employees do not pay FICA tax es on the employers portion. Additionally, it was also specified in the system that self-employed workers were given the chance to start out half of their SECA taxes for income tax purposes. The outline below shows those workers who were exempted from FICA and SECA taxes (http//waysandmeans. house. gov/media/pdf/greenbook2003/Section1. pdf) o State and local government workers o Election workers o Ministerso Federal workers o College students o Household workers o Self-employed workers. The congress had required long-term estimates of the end of the program and they had also set tax rates to ensure that the income of the program was suitable enough to cover its outgo. The long-range projections of the system were affected by three factors demographic factors, economic factors and factors related to Social Security programs. In their 1988 calculate, the trustees used an alternating(a) method to determine their actuarial balance.This method computed the actuarial balance as the difference between the present value of income and follows for the period, which is then divided by the present value of the taxable payroll for the period. Normally, the trustees found their result on the on the closeness of the income and cost-rates. In the long run, the projections of the trustees started troubling. For quite a number of years, the report obtain always projected long-term financing problems and this report had continued to show a near-term buildup of trust fund reserves and the forecast for the next 75 years.The interest which was paid to the trust funds was a way to make the fund increase until it reaches $7. 5 trillion in 2027. However, the trustees had estimated that by 2028, the fund would be insufficient to pay all benefits when all is due. It had been observed that the social security system had continuously come to a worse situation. The congress even seek to help eliminate the long-run problem. Projections were made and that showed that Congress had stemmed the red ink for the next 75 years. However, this situation did not represent the control of the sinless period.Since 1983, the averaging period had continually deficit one (1) year at the back end and at the front end continued to drop a surplus. This had caused the condition to worsen even more. The evaluation of the income and the outgo was based on measuring the period in reaching a conclusion of whether close actuarial balance existed, in which there was a deviation from the amount. In order to meet the test of financial adequacy, the balance at the first 10-year segment essential be at least 100% of the annual expenditure. This condition essentialiness be consistent with the 10-year segment of close actuarial balance.However, under these measures, the trustees made a conclusion in 2003 that the system was not as close as the actuarial balance over the long-run. There had been a deficit in between the summarized income and cost rates for about 1. 92% of the total ta xable payroll. The chart below shows the social security trust funds end of year balances from 2003 to 2042. The projections was not based on a pessimistic assumptions but this hinge on the demographic factors which were based on the post-WWII baby boom and the general aging society. Social public assistance Policy To address this issue, Social Security implemented policies for the members to enjoy.The benefits given by the Social Security were paid to workers and to their dependents should the worker worked long enough to cover employment to be insured. There was a certain measurement used for insured status. The social security uses lifetime record of earnings which was reported under the workers social security number and then counting the number of quarters which were considered as covered credits. There was a time when one credit was earned for each calendar quarter. In which, the worker was paid %50 in wages for covered employment, or just received $100 for self-employed indi viduals.However, a worker also received a credit for each multiple of $100 in an annual earning the total number of credits essential not exceed by four though. There are two types of insured status fully insured and currently insured. For fully insured workers, they must have a total credits which is equal to one credit for each year after dependents reach the age of 21 up to the year before they reach 62 became disabled or died, whichever came first. The fully insured status is required for the eligibility for all types of benefits. Regardless of the age of the worker, he must have a total of at least 6 credits to be fully insured.If the total number of credits of the workers reaches 40, he is insured for life. For disability insurance, workers must have a total of at least 20 credits during the 40-quarter period in which they became disabled. However, if workers are insured before the age of 31, they are straight covered by disability insurance. In general, disability is defin ed to be incapable of gaining substantial activity. The impairment must be medically proven and is pass judgment to last for not less than 12 months so workers can avail the benefits. For workers who are at least 62 years old, they are now eligible for retirement benefits.For the family of the workers, they also get to enjoy other benefits. The following summarizes the benefits that each member of the family can get (http//waysandmeans. house. gov/media/pdf/greenbook2003/Section1. pdf) Spouse benefits the spouse can get periodic benefit which is paid to him/her under the following conditions (1) a currently- unite spouse must be at least 62 and who is caring for more than one of the workers entitled children who are disabled or who have not reach the age of 16 and (2) a divorced, not married spouse of at least 62 years old.The marriage of the divorced spouse should have lasted for 10 years. The divorced spouse was entitled of the workers retirement. Widow(er) benefits a monthl y pay is given to a widow(er) should the widow(er) had not been married and must either be 60 years old or older or the age range is between 50 and 59 and is disabled throughout the waiting period of 5 consecutive months. Childs benefit the child receives a monthly benefit should the child had not been married, the child is biological or adopted and a step child or grandchild of a retiree.The child must be below 18 years old and must be a full-time elementary or secondary student who is below 19 years old. Mothers/Fathers benefit the mother/father of the retiree or survivor gets monthly benefit if (1) the workers benefit was fully or currently insured at time of stopping point and (2) neither the father nor the mother of the deceased worker was not married and must have one or more entitled children of the worker under his/her care.This benefit continues until the youngest child of the worker is below 16 years old and/or disabled. Parents benefit a monthly survivor benefit is given to the parents of the worker should the parent have not been married or is 62 years old or older. The parents must have received half of the support from the worker at the time of the workers death. Lump-sum death benefit an amount of $255 is payable upon the death of a fully- or currently-insured worker to the surviving spouse who was living with the deceased worker.If the worker has no spouse, the lump-sum benefit is paid to the child of the worker. In cases where the worker had neither spouse nor children, the lump-sum amount is not given. When beneficiaries whose income is above a certain threshold, they are then required to include a portion of their benefit to the Social Security Benefits in their federally taxable income.