Open Ended Response #2
ROXANNE LARAIA
Question:
In recent decades entitlement programs have
constituted a substantial portion of the United States
federal budget. Social Security is the largest
entitlement program in the United States. From the
information in the chart and your knowledge of
United States government and politics , perform the
following tasks.
Part A:
a.) Define entitlement program
- An entitlement program is a federal program that
guarantees a certain level of benefits to a person or
other group who meet the requirements set by law
(i.e. Social Security)
Part B:
b.) What is the primary source of revenue for the
Social Security Program
- Social Security is funded by dedicated pay roll taxes
called Federal Insurance Contributions Act (FICA).
Part C:
c.) Identify one threat to the future of the Social
Security program, should the trends depicted in the
chart continue?
- The recent tax cuts to payroll taxes lowered from
6.2% to 4.2%, nearly 30 percent decrease. Since it
will expire in a year workers will have to deal with
big tax hikes, up to 50%, when the rate has to return
to the norm.
Part D:
d.) Describe one demographic trend that threatens the
future of the Social Security Program AND describe
how it is responsible for the threat that you identified
in (c.)
- Baby Boomers turning Social Security required age
and putting unneeded strain on Social Security (in
addition to the high taxes, and less funding)
Part E:
e.) Explain how one of the trends in the chart above
would change if the age of eligibility for Social
Security were raised.
- The “Paid Out” section of the graph will not raise so
much and at such a fast rate if the age requirement
for Social Security benefits is also raised.