“Social security is designed, as the title suggests, to provide security. To protect individuals from unforeseen catastrophes, the government spreads certain risks among all members of society so that no single family bears the full burden of such occurrences.”1
There is much criticism of the Social Security program; that it discriminates against the poor and middle class, that politicians exempted themselves from the tax, that the government lied about the maximum tax, claims that it gives a low rate of return and that it is a pyramid or Ponzi scheme. “Critics, such as libertarian Noble Laureate economist Milton Friedman, say that Social Security redistributes wealth from the poor to the wealthy.” 3 Since the Social Security Wage Base of $106,800 in 2010 and no tax on earnings in excess of this amount, the higher earners pay a low percentage of their total income as compared to poor to middle income individuals. In addition, it is proven that wealthier individuals have a higher life expectancy. This gives them the opportunity to benefit more from the Social Security retiree benefits. Until the Social Security Amendment of 1983 all federal government employees, including the President and members of Congress were exempt from the Social Security Tax and they received no Social Security benefits. From the 1983 Amendment, all federal employees hired in any capacity on or after January 1, 1984 must pay Social Security Tax. According to a Social Security pamphlet from 1936, the federal government promised “…beginning in 1949, twelve years from now, you and your employer will each pay 3 cents on each dollar you earn, up to $3,000 a year. That is the most you will ever pay.”4 In 2010 the tax rate was 6.2% on the first $106,800 of earnings.
Current controversies include proposals to reform the Social Security system which has led to heated debate centering on funding of the program. In particular, there are proposals to privatize the Social...