Origin of Unfunded Liabilities
What is the nature of the unfunded liabilities monster? What is its history? Well we know that the Monster began growing in the 1940s, at the beginning of the baby boom.
At this time the population in the United States began exploding and the progression towards making enormous promises to enormous numbers of people that simple could not be kept. At this time, and particularly four decades later in the 1980s, taking on more debts and choosing the path of short-sighted financial suicide was becoming a national phenomenon.
To really understand the nature of the Monster, we must look only as far as the history of its components, so that is what we shall do.
Origin of Social Security
The Social Security program was created in 1935. The Social Security Act was enacted by President Franklin D. Roosevelt.
Actually, Social Security (SS) is more formerly known as the Old-Age, Survivors, and Disability Insurance program (OASDI) and encompasses virtually all of the the well-known and most significant social programs of the United States.
For example, although when we speak of SS now we are typically referring to the income supplement, the Social Security Act encompasses such financial aid and insurance programs as unemployment benefits, State Children's Health Insurance Program (SCHIP), Medicare, and Medicaid.
SS is funded by the people, for the people - and merely distributed by government. The funds for this transfer of financial security are accumulated through the Federal Insurance Contributions Act tax (FICA), which most of us know all too well.
Roosevelt brought the program to life in order to lessen the struggle of American financial life at a person's weakest moments - such as during unemployment, single parenthood, and old age. Roosevelt said when he signed the program into existence on television, "This measure, gives at least some protection to 30 millions of our citizens against the loss of a job and against poverty-stricken old age."
As reasonable as Roosevelt's ambition may seem, he was actually the first President of the United States to establish government-administered financial support for the elderly.
Since it was created in 1935, the SS program has only grown - in terms of the quantity of money it is promising and the quantity of people it is promising this money to. As we learned earlier, this entitlement program is funded through tax revenues. The tax revenues become the responsibility of the various trust funds that represent the multiple programs that the Social Security Act encompasses.
To illustrate the growth and increase of significance of SS in the American life, consider this - according to the 2011 annual report by the Social Security Board of Trustees, SS is the largest government financial support program on the planet, the largest expense of the federal budget, and will be supporting over 120m Americans in the next two decades - although it started supporting only 30m.
Finally, we know that the Social Security program is funded through tax revenues. The question is, what happens when there are no funds to fund Social Security?
What happens when Social Security is an unfunded liability?
Jelani Asar invites you to prepare yourself with shocking interviews for the economic nightmare of the Unfunded Liabilities Monster at http://usUnfundedLiabilities.wordpress.com. Call for a free income protection quote in Atlanta, Georgia today.
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