Less than a month into his second term, President George W. Bush has begun what might become one of the biggest battles of his Presidency. He hopes to change one of the government's largest and most popular programs, Social Security. It provides financial support to about 48 million Americans, including retired workers, the families of deceased workers and people with severe disabilities.
Last week, President Bush traveled across the country explaining why he believes the system is "collapsing" and needs urgent repair. He told audiences that the nation's retirement account would gradually run out of money. "Now is the time to focus on saving Social Security for young workers," Bush said in Fargo, North Dakota. He wants to let Americans invest some of the money that is now put into the Social Security system. That way, he argues, people will have a say in how their funds are managed, and they may end up with more retirement money.
But such a change won't come easily. Many critics argue that the current system is not in dire need of a fix. Besides, they say, the new plan won't work. "The Bush plan isn't really Social Security reform, it's more like Social Security roulette," said Senate Democratic leader Harry Reid of Nevada.
A Safety Net
Over its 70-year history, Social Security has
paid out more than $7.4 trillion dollars. This year, the government will
pay about $509 billion in Social Security benefits. Nine out of 10
people over 65 receive payments. One out of five retired Americans
depends on the monthly check as their only income.
So far, the government has been able to pay benefits with money collected through taxes on workers and a savings fund. But the U.S. population is growing older fast. By 2018, it is expected that under the current system, Social Security will start paying out more in benefits than it takes in from workers.
But many think that the changes that Bush proposes are risky. If people's private investments fail, they could be left with too little money for their retirement. Plus, critics say, the change would be costly. The government would have to raise $2 trillion to pay benefits once workers begin to put their money into private accounts instead of keeping it in the government account.
The Battle Ahead
To make changes to the Social Security system, Bush will have to
persuade American workers and their representatives in Congress, who
will have to vote on any new plan.
That's why the President is touring the country trying to build support for his ideas. Bush won't be the only one weighing in on the issue. The American Association of Retired Persons (AARP) is an organization that represents 35 million older Americans. AARP plans to run TV ads criticizing the proposed changes.
"I know that none of these reforms would be easy," Bush said in his State of the Union address on February 2. "But we have to move ahead with courage and honesty."
The Way It Works Now
Social Security functions like a pipeline, channeling some of workers'
taxes to eligible recipients. Here's how one worker's weekly
contribution makes its way through the system.
1. Let's say John Smith earns $100 per week. The government deducts a tax of 6.2% from his paycheck. Smith's company contributes an amount equal to that 6.2% to the government.
2. Most of that money goes into a fund that pays current recipients.
3. The government invests the remainder of the money, along with money from other workers and companies. The money grows as it earns interest.
4. After retiring, or otherwise becoming eligible, John Smith collects a monthly check.
Why Was It Started?
In 1935, President Franklin D. Roosevelt signed the Social Security Act.
It established the government's first national program to provide
financial support for workers.
Social Security was launched during the Great Depression of the 1930s, when many people lost their jobs and their life savings. The program lent a helping hand to those in need. In 1939, benefits for family members were added.