Social Security Act (1935)

Francis E. Townsend organized __

"Townsend Clubs" to support his proposal that everyone over 60 who was unemployed should be given $200 (as long as they spent it within 30 days) - would be funded through a tax on business transactions

Swedish approach to Privitization

"pro choice" meaning workers contribute 18.5% of income to retirement with 16% going into publicly managed plan (the remaining was an add-on with an individual fund). COST WAS MINIMIZED

Cap for SS

$132,900

In 1983, President Reagan had the following measures implemented:

1. Revisions in the COLA (still hasn't been applied) 2. Taxation of benefits 3. Increased retirement ages 4. Work incentives

Central Provident Fund - 3 types of funds

1. ordinary account (housing, investments, education); 2. special account (old age, retirement); 3. Medisave (hospitals, medical insurance)

Four goals of PRWORA

1. provide assistance to needy families to keep children in home 2. promoting job preparation, work, marriage 3. prevent wedlock pregnancies 4. encourage two parent families

UI was designed to provide temporary replacement of lost wages. Eligibility was based on ___

1. the worker's earning history 2. the reason for unemployment 3. worker's availability for work (varies state to state)

When created, two social insurance programs felt they should be enacted immediately

1. unemployment insurance 2. old-age insurance

Age Pension Residency Requirements

10 years total (at lest the last 5 years continuously); exempted for refugees and women whose husband is a resident that dies only needs 2 years residency

how many titles were included in the original SS?

11

In 1935, ___ were unemployed

15 million workers

social security # of people working/retired

175 million working, 63 million retired

By 1931, __ states had established compulsory old-age insurance programs for workers

18

Central provident fund - how much is contributed

20% of income, employers contribute 17%

With Obamacare, the Trustees projected the Hospital Insurance Trust Fund will be ale to play its bills until __

2030 (but this changed to 2028 in the 2016 report)

What year is it predicted that SS will be gone?

2034

Central Provident Fund - government guarantees up to ___

5% interest

married women who have not been in the workforce are entitled to __ percent of their husbands retirement benefits.

50

What age do you retire in Singapore?

62

The OSAI covers what % of workers?

94% of workers and is an income source for 9 out of 10 older Americans

What did Sozialversicherung (social insurance program) offer workers?

A stake in the political order and gaining enough popular support to survive two worlds wars, national socialism, and foreign occupation

Age Pension (Australia) age requirement

Age requirement is 66 but it is slowly getting higher because of an aging population (in 2021, it will increase to 66.5 years)

ADC

Aid to Dependent Children Program is a program providing financial assistance for needy children whose parents have abandoned them. The program is a function of the Department of Social Services. Later renamed AFDC

Obamacare made changes to Medicare

Beneficiaries save money on prescription drugs and slowed the annual growth in per-enrollee expenditures

In 1972, ___ was added

COLA's

The first constitutional challenge of SS before the SS

Charles C. Steward Machine Company of Alabama sued to recover its share of SS taxes (claiming the payroll tax was an illegal excise tax) -> court said the tax was constitutional because of the Depression

__ was the first nation that experimented with privatization in 1981.

Chile (workers were required to contribute 10% of income)

in 1954, __ was added

D

What part of SS barely passed by congress?

DI (opposition because there was fear that it would reduce the incentive to work)

What was a barrier to the development in social insurance in England?

Elizabethan Poor Law: believed poverty was the result of personal failings and efforts should be on moral reform of individuals

FICA

Federal Insurance Contributions Act; tax levied on both employers and employees to pay for Social Security (12.4%) and medicare (2.9%)

in 1965, ___ was added

H (medicare)

Rate you are paid from SS

In 1935, $22 single/$36 married, total country paid $1,258,000; In 2019, $1461 single/$2340 married, total country paid $996,600,000,000

Contribution Increases

In 1935, $30 max or 1% of income; In 2019, $10, 167 max or 7.65% of income

Age Pension details

Income (means) test required, asset reductions and cutoff, funded by general taxes (higher stigma)

Why did Bismark really establish his first social insurance program?

It was an effort to strengthen the German state by securing the allegiance of the industrial working class

Who passed the Pension Act of 1908 that established social insurance for retirement income?

Lloyd George and Winston Churchill (formed an activist regime after the 1906 election of a liberal government)

When created, it was __

OAI (1/2 labor force)

Who is credited with establishing Europe's first social insurance program? (1880s)

Otto von Bismarck in Germany

legal immigrants lost access to SSI and food stamps (unless spouse had worked for 10+ years without benefits) under the ___ act

PRWORA

Public Assistance (welfare)

Paid out of general tax revenues, requires a "mean test", has a high amount of stigma

Medicare Part A, B, C, D

Part A is hospital insurance, part B is optional coverage for physician services, Part C is Medicare advantage, Part D provides coverage for prescription medications

In 1939 ___ was added

S

British experience with Privatization

SERPS (state earnings-related pension scheme); under the carve out system, workers were encouraged to stop investing in SERPS and invest in approved personal pension (APP). The government ended up spending more than it saved through reduced benefit payments so the government then wanted people to come back to SERPS (to do this they changed the rules of APPs which left many workers worse off)

women are more likely than men to rely on ___

SS as their primary source of income

Why wasn't the French social insurance system established until 1930?

Small property owners successfully opposed it because as members of the "petite bourgeoisie" they feared that the government would increase their control of the capital market and it would disrupt their business (they thought social security taxes would undermine workers' ability to accumulate personal savings)

Social Security Act authorizes three public assistance programs

TANF, SSI, Medicaid

Where does the extra money from SS go?

The SS trust fund: 1. OASI 2. HI 3. SMI

What changed people's minds about social insurance?

The great depression (the stock market crash) 5,000 banks went out of business -> people found themselves in poverty through no fault of their own

What was the myth of why Bismark established his program?

The myth was this was to force his political foes into retirement

the SS act originally required that assets be invested in the safest possible instrument:

US Treasury notes

Kiwisaver - how much you contribute

You can choose 3%, 4%, or 8% and employer does 3%

Social Insurance

You must pay in before you can take out, benefits paid from dedicated funds, benefits are legal "entitlements" (regardless of income level), less stigma

Kiwisaver, until 2015 they had ___

a $1,000 kickstart

second case of SS in SS

a shareholder with Edison Electric Illuminating Company of Boston argued that deducting SS taxes from wages would produce unrest -> court rejected this argument because of the concept of general welfare

Kiwisaver (new Zealand)

a voluntary individual retirement account (supplementary)

equity

achieved when benefits drawn are based on contributions paid (when individuals receive a return that is proportional to their investment in the program)

Zebley case

advocates for children with disabilities to be on SSI (including mental illness and behavior disorders)

SSI eligibility requirements

aged, blind, disabled and financial hardship

the 19th century social insurance programs were adopted by __ regimes

authoritarian

AIME

average indexed monthly earnings (the purpose is to achieve equity so benefits are computed on the basis of contributions; to be eligible to draw SS benefits, an individual must have worked in covered employment for at least 10 years)

adequacy

benefits should be sufficient to maintain a decent standard of living, regardless of individual contributions (in other words, it is the guarantee of a modest income in old age)

Central Provident Fund (Singapore)

compulsory saving fund (mandatory for citizens)

Kiwisavor three funds

conservative (invest in bonds and cash making it safe); balanced; growth (high yield investment, more risk)

1966 Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA)

dismantled the New Deal guarantee of a minimum income for needy children

In 1961, ____ was added

early retirement (you'd get 80%)

only the __ and __ have access to public health insurance in America

elderly (medicare) and poor (medicaid)

Who was Abraham Epstein?

founded the American Association for Old-Age Security in 1927 to advance his social insurance scheme (his proposal didn't have the support of workers or politicians because of the widespread belief that mandatory social insurance program would be declared unconstitutional)

Privatization appeals to __

free market proponents

Values against Social Insurance

hard work, individual responsibility, family and church relief

life expentancy

in 1935, 55.8 for male, 58.7 for female (most people didn't reach 65 to even get SS); in 2017, 76.1 for male, 81.1 for female (everybody lives to need SS now)

Participation in social insurance must be mandatory. Excuses include _____

invincibility mindset, other obligations, poor decision makers

Americans established social insurance for workers __ than most European nations

later

What happened in England as industrialization advanced?

local authorities were overwhelmed by the needs of older workers

Most European nations had _____ old-age insurance programs in place prior to World War 1

mandatory (which is why France's position on social insurance was unusual) - the programs enhanced worker's loyalty to the state by giving laborers a stake in the government

regressive tax

more money, less tax

progressive tax

more money, more tax

3 fears from early Americans

old age, illness, disability

Franklin Delano Roosevelt & the original Social Security Act included __

old-age insurance that provided benefits only to retired workers, not to their survivors or to workers with disabilities. The original program also only covered about half of the labor force

solvency

one's ability to pay legitimate debts

In 1910, roughly half of the workforce had __

private insurance against accidents and illness

SSI is sometimes described as __

program of last resort

replacement rate

proportion of earnings that you receive in retirement

After the 1920s, who established private pension plans for their employees?

public utilities, railroads, and manufacturing firms

Alternatives to the solvency debate

raising payroll taxes, eliminating the wage cap, investing the trust fund for greater return, increasing the retirement age, and reducing benefits

In 1950s____ was added

self employed and farmers

Prior to 1996, ___ was considered an appropriate basis for receiving disability benefits under DI

severe drug addiction or alcoholism

Social insurance helped be a safety net in that it ____

sharing of risk, pooling of resources, payment to victims

Medical insurance originated with ___

sickness insurance

three types of programs authorized under the Social Security Act

social insurance, public assistance, social services

In 2000, Congress eliminated the _____

social security retirement test

earnings sharing & dual-earner couples

spousal benefits would be eliminated

experience rating

state unemployment tax rates vary depending on each firm's use of unemployment compensation during previous years (firms that have had high rates of unemployment pay higher payroll taxes than those with lower rates). it was designed to reduce unemployment by giving employers an incentive to stabilize their workforce

Since state unemployment taxes are based on benefits paid, firms in states with high benefit rates ___

suffer from a competitive disadvantage -> leads to a "race for the bottom" in which states compete for the lowest unemployment tax rates

Retirement insurance was made available to federal employees in 1920 through the establishment of ___

the Federal Employees Retirement Program

What happened in 2018?

the benefits we paid out exceeded income (had to take money out of the SS trust fund)

Beginning in 1999, The SS Administration launched ___

the largest customized mailing ever undertaken by a federal agency. The statements raised public awareness of how the program operates

what was the motivation for social insurance schemes in Western Europe?

the need to secure loyalty from the growing number of industrial wage earners

Those who failed to provide for their old age were left to ___

their families or limited charitable assistance that was available

Central Provident Fund - you can withdraw early if

you renounce citizenship or are disabled