Debtbusters Group 4 Paper
Introduction
Deficit Impact
For the eight proposals that we have discussed this semester, we approved four and rejected four. Of the four proposals that we approved, one was to raise the deficit. We raised the deficit by $78 billion while the remaining three were in favor of reducing the deficit. This $78 billion regards investing into human capital, or in other words, access to child care programs.
Approved proposal
One proposal that the majority of our group voted in favor of was social security payroll tax. This proposal we voted in favor of 6 to 1. This proposal would decrease the deficit by -$785 billion. This is one of the biggest proposals we voted in favor of that would allow a decrease in the deficit. In this proposal the government wants to increase the cap of the social security tax on how much one earns. This would allow the cap for the income of a person who earns $285,000 to be paying a higher social security tax which would be up from 83% to 90% of wages in the USA. This would be due to a higher than average increase of wages compared to what it was when the cap was first set by the government.
Majority of our group agreed that the pros were good enough to convince us to vote yes to this proposal compared to the cons. Some of the pros of this proposal are that increasing the cap for the tax would make it so there is a much better longer term availability of money for social security since we are running out of money for social security programs, this will help with that. Another benefit of this proposal is the rich will be taxed more. This will boost the morale of the poor since they are paying 100% of the tax on their earnings. It will make it more fair and let the middle and poor class know that it is not just them they have to pay taxes. Another pro of this proposal is that any earning above the cap will not be taxed so even rich people are earning more than the cap they will not be taxed on that which will be a relief for them and it somewhat fair for them also. Some cons of this proposal are that the rich are the ones who already pay most of the tax for social security but receive the least amount of benefits from it. Now they are going to have to pay even more. This would also make it so people who have high paying jobs will get their money taken into taxes making them similar to somebody with fewer wage than them. There will be no benefit in it for them to earn a higher wage when the money will just go into taxes. Another con of this proposal is that some people might not work more to go above the wage since they know they will not get the money anyway.
The public might have an up and down opinion with this proposal. Some of the lower working class might be happy that the rich are paying their share of taxes and all that load is not on them alone. Also the people that are close to being retired will be happy that there will be enough money for them to receive their social security benefits for a while. The rich might be mad at this proposal because it could be unfair on them since they already pay the majority of the tax on social security. People who are close to that cap of $285,000 might not be willing to work more since their money will be taken into taxes.
Rejected proposal
In our group we approved 4 out of the 8 proposals to decrease the government spending deficit. One of the proposals my group said no to was making changes to the social security payroll tax. This was a proposal that was rejected by a majority of the group which was voted on 4 to 1 in favor of it. Social security is one of the biggest spending categories in the US budget which makes up a total of 24% of the budget. It was created to help with expenses of the older generation. Once they retire they will have some money to pay for their expenses. This was created on the idea that current workers will pay for the workers that are retired and this will continue on but it has not gone that way. When Social security was first created the average age of a person was much smaller than it is now compared from 61 years old to around 79 now. Also when social security was first created the average worker to retiree ratio was 5 to 1 which has now dropped to 3 to 1. This has made it so all of the money saved up for social security will run out by 2040 and there will not be enough workers to make up for it. While all of this is happening a lot of elderly people are living in poverty. This proposal will make it so that the social security retirement age will be changed to 70 years old.
The pros on this proposal were not good enough for my group to approve the proposal. The cons made us lean towards rejecting this proposal which is what we did with a 4 to 1 rejection of this proposal. Some of the pros of this proposal are it will help people collect their social security benefits for a longer lifetime. It will make it so there’s enough money for everybody to be able to collect and not run out. Those who work in physically demanding jobs will be able apply for disability benefits at age 62. They will also be able to apply for reduced benefits. This will help them get a headstart on their retirement savings or spending depending on what that person does. In the long run this proposal will be a success and make it so social security will be sustainable for a longer period of time compared to without the approval of this proposal. The cons of this proposal are that those workers that are working in physically demanding jobs will not make it to 70 years old. They will need to retire a lot earlier. Also the ones that affect most the poor income workers who need the social security benefits the most will need to wait even more years to receive them. They might be living through poverty by the time they get to 70.
The public reaction to this proposal to up the age for the social security benefit will not be received well. Most people have been working for so long since they were out of high school and now the government is telling them they will have to work even longer will make the working class very angry. Some people work physical jobs that they cant even work fast 50 so adding more years to the retirement plan will devastate them mentaly and physically. It will also make it harder for the new generation to get good middle class jobs because now that more people will have to work longer those same amount of jobs will not be available. Also since there is always new technology being developed it is good to get rid of old ideas or how things are done and get in the new wave of doing this which will benefit society so raising the retirement age is not good.
Demographics
Within those who participated, our group consists entirely of Asian members. Our ages are fairly close to one another.
Political Effect:
Conclusion/Real World Politics