Explain how Social Security is currently funded and the arguments in favor of and against privatizing Social Security
What will be an ideal response?
Currently, Social Security is funded through a trust fund which receives funding from taxing employees and employers. Proponents of privatizing Social Security argue that privatization would give consumers more control, leading to higher benefits and allow participants to pass wealth to survivors in the case of premature death. Opponents argue that privatization would not be cost-effective for low income employees, would have high transition costs and high administrative costs, benefits would have to be cut dramatically for current workers, current workers would be double taxed, there would be no protection from inflation, there is uncertainty in the stock market, most workers are not investor savvy and a fundamental shift from governmental to individual responsibility would result, not resolving Social Security long term financial problems.
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