Changes

===United States===

===United States===

Social Security was founded as a quick-fix solution to [[unemployment]] by paying off older workers to give up their jobs for younger workers. No net new jobs were created. Economists call this a zero-sum game, where net gains and losses are exactly balanced.  The payment system mimicks the idea of insurance premiums with payments withheld from a workers paycheck, however none of the premiums were ever invested in a so-called "Trust fund," and were actually  transferred immediately in a "pay as you go" (or "paygo") system destined for immediate [[aggregate consumption]]. Hence many of the structural flaws date from the programs' origins.

Social Security was founded as a quick-fix solution to [[unemployment]] by paying off older workers to give up their jobs for younger workers. No net new jobs were created. Economists call this a zero-sum game, where net gains and losses are exactly balanced.  The payment system mimicks the idea of insurance premiums with payments withheld from a workers paycheck. None of the premiums, however, have ever been invested in a so-called "Trust fund," and are actually  diverted into a "pay as you go" (or "paygo") system destined for immediate [[aggregate consumption]]. Hence many of the structural flaws date from the programs' origins.

 

Payments are based on a percentage of earnings of workers which become an obligation, or [[debt]], of the United States government.

Over the years excess withholdings from workers paychecks, (known as F.I.C.A.), have been used to fund government paygo operations such as the [[Vietnam War]],<ref>"President Johnson issued a 'unified' federal budget for FY1969. This was done administratively (i.e., not as a result of

Over the years excess withholdings from workers paychecks, (known as F.I.C.A.), have been used to fund government paygo operations such as the [[Vietnam War]],<ref>"President Johnson issued a 'unified' federal budget for FY1969. This was done administratively (i.e., not as a result of

legislation)." ''Social Security and the Federal Budget: What Does Social Security’s Being “Off Budget” Mean?'' Congresasional Research Service, 98-422 EPW, Updated July 23, 1998, [http://assets.opencrs.com/rpts/98-422_19980723.pdf p. 20.]</ref><ref>[http://research.stlouisfed.org/publications/review/68/03/Stabilization_Mar1968.pdf The Federal Budget and Stabilization Policy in 1968.]</ref><ref>[http://www.taxfoundation.org/files/rp25-2.pdf Trust Funds in the Unified Budget,] p.3.</ref> for instance. However, overwithholding from workers paychecks will become less of a problem in the near future as the gap is closed between the ratio of workers supporting the system, and those drawing upon the system for sustenance.

legislation)." ''Social Security and the Federal Budget: What Does Social Security’s Being “Off Budget” Mean?'' Congresasional Research Service, 98-422 EPW, Updated July 23, 1998, [http://assets.opencrs.com/rpts/98-422_19980723.pdf p. 20.]</ref><ref>[http://research.stlouisfed.org/publications/review/68/03/Stabilization_Mar1968.pdf The Federal Budget and Stabilization Policy in 1968.]</ref><ref>[http://www.taxfoundation.org/files/rp25-2.pdf Trust Funds in the Unified Budget,] p.3.</ref> for instance. However, overwithholding from workers paychecks will become less of a problem in the near future as the gap is closed between the ratio of workers supporting the system, and those drawing upon the system for sustenance.

With the abject failure of the [[New Deal|First New Deal]] to create any net new private sector jobs, the Social Security Act was passed in 1935 and started operations in 1937. Since benefits required at least 5 years of payments, a special program was included in 1937 to help old people who already were retired and who had high rates of poverty.  

With the abject failure of the [[New Deal|First New Deal]] to create any net new private sector jobs, the Social Security Act was passed in 1935 and started operations in 1937. Since benefits required at least 5 years of payments, a special program was included in 1937 to help old people who already were retired and who had high rates of poverty.

===Roosevelt's proposal for an overwithholding slush fund===

===Roosevelt's proposal for an overwithholding slush fund===