When President Bush revealed his plan to overhaul Social Security in his speech at the Republican convention, it was received with mixed reactions. President Bush wants to overhaul Social Security and put it on sound financial footing. (Christine Dugas, 2004) According to Henry J. Aaron (1999, p55) Social Security has been the most successful domestic government social program of the twentieth century. In addition to providing income support to 44 million aged, disabled, and survivor beneficiaries it provides the majority of income for more than half of elderly beneficiaries.
[...] The social assistance that Social Security provides is vitally important and adequate arrangements should be made in order to continue providing benefits to retirees, the disabled, and survivors. Proposals to replace Social Security, in whole or in part should be reviewed carefully, without prejudices. Effective implementations with regular monitoring and upgradation of policies may work well for our economy also, as it has for other countries like Chile. With careful planning privatization of Social Security can also become a large and well- accepted instrument for providing economic assistance to the people. In the long run, privatization will not only provide large annual cash-flow surpluses, [...]
[...] chose tax cuts, and now it will be very difficult to find the resources to finance Social Security reform,” he added. (Christine Dugas, 2004) Since the Congressional Budget Office projects that the Social Security trust fund will be exhausted in 2052, several people think eventually, privatization will make the social security system more stable. To evaluate the validity of Niggle's and Aaron's suggestions and hypothesis I would review the economic reforms taken up by other countries. Although Social Security offered by the government appears to be more secure and time tested, I would definitely like to have better interest rates on my investments and save for my future. [...]
[...] The supporter of these proposals say that the failure to privatize Social Security would result in deficits in SS budgets and low projected rates of return on contributions to current and future system participants. Although Niggle (2000, p.789) says that privatization may result in an increase in the rates of saving and investment, he presents several arguments against the proposed change. The author says that the probability of an important SS budget crisis is very low, and expects any future revenue shortfalls to be relatively small and easily financed. [...]
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