SEA at ASU. Student Economics Association. Student Economics Association. Economics is a social science concerned with the logic of scarcity, cost , value, and choice Economics is not all about money , math, and numbers Money is just a medium of exchange;
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Student Economics Association
Student Economics Association
the logic of scarcity, cost, value, and choice
Economics is not all about
money, math, and numbers
Money is just a medium of exchange;
it is not a productive resource.What is Economics?
SS Check #00-000-01 --- $22.54
Franklin Delano Roosevelt
signs Social Security Act
in the Cabinet Room of the
Golden Years:1940 - 1975
Ida Mae Fuller collects social
security checks for 35 years
(until age of 100) – receiving
$22,888.92 after paying $24.75
over a three-year period.
1. Do you need the government to force you
to save for your retirement? Does anyone?
2. Do “we”, as a society, have a responsibility to care
for those who have not prepared for their retirements?
3. Do you think you will ever receive social security
4. Should the “rich” help pay for the
retirement of the less fortunate?
To what extent?
How does Social Security Work?
Federal Insurance Contribution Act (FICA)
Payroll Taxes: 15.3% of Earned Income
Employee pays 6.2% for SS
1.45% for Medicare
Employer pays matching funds
Earnings “cap” of $90,000
(maximum tax of $11,160)
All of this (and more) is spent as it comes in. There is no special
account where social security contributions are earning interest.
You do have a social security “account”: a computer entry of
what you have contributed, how much the government “owes”
you, and when you can start collecting it.
Future taxpayers own future retirees a LOT of money.
Statistical projections of all those
IOUs add up to about $2 Trillion.
In 2006, total social security tax
receipts will more than cover
payments to retirees.
Over the next 60 years, projected
payments will exceed social
security taxes by about $7 Trillion.
Try to fix the current system:
tinker with taxes and benefits
“Privatize”: continue forced savings, but
but create personal investment accounts
accounts (with some federal regulation).
Terminate social security: pay off obligations,
but government stops administering
saving and retirement benefits.
Raise the retirement age
Raise the income cap on the
Social Security portion of FICA
Raise the FICA tax rate for Social Security
Reduce scheduled benefits
Changes the definition
of a retiree
Reduces the number
Reduces the number of years
retirees will be paid benefits
… but this must be phased in
slowly and will take a long time
to implement fairly
Increases taxable income
Increases tax revenue
Makes payroll tax
Laffer curve effects
Reduces Obligated Payments
Closes Gap Between Workers’ Payments and Retirees’ Receipts
Default on Obligations !!!
Establishes private accounts,
With (same old…)forced savings
Allows for investment of savings
to earn interest on money
More personal responsibility
Personal control is two-edged
sword: lack of investment expertise
raises significant risk of loss.
Government no longer
Ends “the problem”