Over the past few decades the Social Security debate continues to be endless and that our social security system is considered to be in a nation crises. Yet why was such a system created and implemented in this nation even though it is not considered to be freedom from the external control meaning that payroll tax dollars earned by the worker is entrusted to the Federal government.
The origin of Social Security was first proposed by Dr. Francis Everett Townsend an American physician who was best known for his revolving old-age pension proposal during the Great Depression. The Townsend Plan hypothesis was to implement a monthly pension of $200.00 a month to every retired citizen age 60 or older. According to the standard of living, in 1930, receiving monetary pensions of $200.00 a month was considered to be large sum of money which was equivalent to the income of the middle class of the 1930's. Yet enable to achieve that level of income, Dr. Townsend proposed that a national sales tax of 2% on all business transaction. Once the tax is collected the pension fund is distributed to each pensioner and thus it would have been manditory and required that each and every pensioner to spend his/her $200.00 within 30 days. This entire concept was just an idea to end the great depression though consumer spending. The end results would have ended the poverty among the elderly. This concept is no different then the idea of tax rebates which is to initiate consumer spending and spur the economy a bit. Like all analogies, both Social Security and Tax Rebates are nothing more then a band aid that have a few flaws in the purpose that it was designed to do. Typical flaws towards the Thompson Plan would be that pensioners spending would be beneftial at first yet the elasticity of sustaining continous spending would decline at some point and to be a at minimum which the pensioners would have no desire to spend their monetary funds on goods or services. When monetary funds are not spent within the economy it's the consumers choice and decide where and when to save those monetary dollars. Therefore the pensioners monetary dollars are not in circulation to be profited by businesses nor to be collected as sales tax. Another problem is the anticipation that there would be a flow and increase of workers. In all world economies there are always a risk of recessions, inflation and unemployment. If any of these 3 factors or one of them interjects within the system, the collection of payroll taxes would diminish quickly which would result in a spiral decline of insufficient funds to the payroll tax for the high pensions. As a consequence the Social Security fund would be in a deficit. This is the same argument and debate that was presented in 1934. If we were to advance to 1980, during the Reagan and Carter debates, then Governor Reagan was asked the question, “How much longer can the young wage - earner expect to bear the ever increasing burden of the Social Security system?”[1]. As to Governor Reagan's response to the question that was asked of him. Governor Ronald Reagan’s rebuttal, Governor Ronald Reagan implied that the “Great Society” is the cause of the many problems that we face with the Social Security System of then and now. At that time in 1980, the nation faced the worst economic crises which the nation was plagued with double digit inflation, high gas and energy prices, rationed gasoline, high taxes and a high unemployment rate of 8.5%. Yet the Interpretations, the War on Poverty remains controversial which still does not address the social issues that plagues our country of today. The only solution at that time in 1980 was to increase the largest payroll tax for Social Security to postpone the entire collapse of the system to the forward years. In 1982, with bipartisan agreements, President Ronald Reagan did sign into law the largest payroll tax for Social Security. Yet the response from President Carter, his administration did not want to see the Social Security System to collapse either and have it to remain stable but did not offer a response to an idea. Considering both parties it is obvious that both the Republicans and Democrats are committed on a bipartisan to protect Social Security. When you put political ideology in to it, both parties disagree on the issue how to protect Social Security. As of today as it was in 1980, there are still open debates and rhetoric from both parties on this issue.
Still there is an on going of taxes that are still collected in many ways based upon income and sales percentages that correlates to labor, goods and services. Once all of the taxes are collected there is a separation between the federal government and the citizens. There is a separation between liberty and giving up liberty which the citizen does not have control over his/her tax that was collected. Once the tax dollars are collected, the tax dollars are appropriated though the control of the congress which is the federal government which Congress over sees how the money is spent or saved. Therefore the citizens are nothing more spectators and not participants in the appropriation decisions. As spectators you as a citizen are giving up your liberties through the use of taxes which taxes can divide a nation in to class income and class structures. The giving up liberty or to limit government in a sense that congress has the authority to raise taxes to any percentage to create tyranny and thus you as a citizen and worker become a slave to the federal government. Congress has the moral authority to reduce taxes to limit government thus keeping more of your money that you earn so that you have more freedom to save and spend at your own discretion. This is your freedom from the external control which is the federal government. Yet even though it is not the autonomy as thought of by idealists who founded this country on such principles. The Social Security system does not grant us the right of self-government to make a moral and responsible decision. It’s the moral obligation of self governing people who elect our public servants that “We the People” entrust our payroll tax dollars to the public servants that we elect to make the moral and responsible decision. This line of thought is in the same relationship to the fact that the Social Security payroll taxes and retirement benefits are not fundamentally associated with the idea that both are legally binded. According to the Supreme Court case of 1960 Flemming v. Nestor, the decision was based upon that retirees do not have a contractual right to a particular level of Social Security benefits[2]. In other words the Social Security System is a “pay as you go” system on automatic pilot where Social Security consists of a tax that is put in to the system and the functional out put of government transfers therefore there is no legally binding connection between the two. As established by the Supreme Court Decision that payroll tax creates a “no claim” to benefits. As a notation as mentioned before It’s the moral obligation of self governing people who elect our public servants that “We the People” entrust our payroll tax dollars to the public servants that we elect to make the moral and responsible decision. Why? Since there is no connection between the right of claim to benefits and the redistribution of monetary funds Congress have the fundamental powers to reduce or to increase benefits or to redesign the program all together with out trespassing on any legally recognized right. As noted by the Cato Institute “Since legislatures cannot legally bind future legislatures, the existence and level of payroll taxes and Social Security transfers are a matter of popular will and legislative discretion.”[3]
As to the Social Security System and the “Great Society” it is Obvious that the “New Liberals” perhaps best, ‘social justice’, liberalism challenges this intimate connection between personal liberty and private properties. Since the implementation of the Social Security System and the “Great Society” that was created by the older generation from 1935 to 1970. New Liberalism, a new design of social justice was just loosing faith in the free market and society. Their political ideology and agendas was now placed and rooted in to their faith in government as a means of supervising economic life. The New Liberalism (welfare state) is ever increasing at the expense of the tax payers and thus that no social group advances at the cost of another which is nothing more then redistribution of wealth, the intereference and control of your life.
[1] New York Times, Saturday, October 24, 1980. Carter and Reagan presidential debates.
[2] 1960 Flemming v. Nestor, the decision was based upon that retirees do not have a contractual right to a particular level of Social Security benefits.
[3] June 28, 2005 SSP No. 34 Noble Lies, Liberal Purposes, and Personal Retirement Accounts by Will Wilkinson. Cato Institute
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