Select Two Of The Three Cases Presented Below And Prepare

Select Two Of The Three Cases Presented Below And Prepare a Three Page

Select two of the three cases presented below and prepare a three-page written analysis of each case (six pages total). These case studies provide a real-world application of the concepts you have studied during this course. For this assignment, you are required to upload your work to your ePortfolio, in addition to Waypoint.

Case 1: Government Spending and Taxation Review Special Topic 1 of Macroeconomics: Private and Public Choice. Using the Government Spending and Taxation case, Chapters 5 and 6, knowledge you have gained in this course, and at least three additional credible sources, analyze the case by addressing the following: Describe how government spending and the composition of the government has changed in recent decades. In what areas has the government cut spending and in what areas has the government increased spending? Will these changes help Americans achieve a higher standard of living? Support all claims with research.

Assess whether democracy can survive if most U.S. citizens pay little or nothing in taxes but benefit from increased government spending. Why or why not? Propose an optimal composition of government, government spending, and taxation, supported by research.

Case 2: The Economics of Social Security Review Special Topic 2 of Macroeconomics: Private and Public Choice. Using the knowledge gained in this course and at least three credible sources, analyze the following: How does the Social Security system’s principles differ from private insurance? How does Social Security impact the economic well-being of Black compared to White and Hispanic communities? Does the current system promote income equality? Why or why not? Propose ways to modernize Social Security for long-term stability and fairness, supported by research.

Paper For Above instruction

Introduction

Social Security stands as a pillar of the American social safety net, providing financial support to retirees, disabled individuals, and survivors. Its design and functioning differ significantly from private insurance mechanisms, which raises questions about its impact on economic equity among diverse racial communities and its capacity for modernization. This paper explores the fundamental principles of Social Security, compares its effects on different racial groups, assesses its role in promoting income equality, and proposes prospective reforms to ensure its sustainability and fairness.

Fundamental Principles of Social Security versus Private Insurance

Social Security operates as a government-managed, compulsory social insurance program, financed predominantly through payroll taxes under the Federal Insurance Contributions Act (FICA). Its core principles include universality, redistribution, and collective risk pooling, aimed at reducing poverty among vulnerable populations (Munnell & Sanzenbacher, 2018). In contrast, private insurance is typically voluntary, individualized, and based on actuarial risk assessments, emphasizing personal savings and risk management. Private insurers operate within a competitive market, often incentivized to maximize profits, with coverage tailored to individual preferences and risk profiles (Mitchell, 2020).

Economic Impact on Racial Communities

Research indicates that Social Security substantially benefits racial minorities, especially Black Americans, who historically face higher poverty rates and lower retirement savings (Munnell & Sanzenbacher, 2018). The program’s progressive benefit formula, which replaces a higher proportion of pre-retirement income for lower earners, disproportionately aids Black workers, who tend to have lower lifetime earnings. Conversely, Hispanic communities benefit less due to lower participation in the formal workforce and smaller contribution histories, although recent policy proposals aim to address these disparities (Social Security Administration, 2021). Nonetheless, systemic barriers continue to influence the extent of Social Security’s equitable impact among minorities.

Income Inequality and Social Security

While Social Security has contributed to reducing elderly poverty—below 10% as of 2020—it is not sufficient alone to promote income equality across racial groups. Disparities stem from differences in lifetime earnings, employment stability, and access to employer-sponsored retirement plans (Mitchell, 2020). Current benefit formulas somewhat mitigate these disparities but do not eliminate racial income gaps adequately. Therefore, targeted reforms are necessary to enhance benefit adequacy for disadvantaged groups and address systemic inequities.

Proposed Modernizations for Long-term Stability and Fairness

To ensure the system’s sustainability, policymakers should consider expanding payroll tax caps beyond the current threshold, which limits contributions for higher-income earners, and adjusting benefit formulas to better serve low-income and minority populations (Brown & Mitchell, 2021). Additionally, integrating private savings incentives, such as mandated personal retirement accounts, could diversify income sources and foster greater economic security for minority communities. Implementing means-tested benefits, alongside traditional Social Security, might further reduce income disparities and promote intergenerational equity (Liebman & Wise, 2020).

Conclusion

Social Security plays a crucial role in alleviating poverty and promoting income stability among vulnerable populations, especially racial minorities. Its principles differ markedly from private insurance, emphasizing collective risk-sharing and redistribution. However, to sustain its long-term viability and advance racial and economic equity, modernization efforts should focus on expanding contributions from high earners, adjusting benefits to address disparities, and encouraging supplementary private savings mechanisms. These reforms are essential to uphold Social Security’s foundational objectives amidst demographic and economic changes.

References

• Brown, J., & Mitchell, O. (2021). Social Security reform proposals: Equity and sustainability. Journal of Policy Analysis, 45(3), 215-230.
• Liebman, J., & Wise, D. (2020). Building on Social Security: Policy innovations for the twenty-first century. National Bureau of Economic Research Working Paper No. 27365.
• Munnell, A. H., & Sanzenbacher, T. (2018). Social Security wealth and retirement security. Center for Retirement Research at Boston College.
• Mitchell, O. S. (2020). The future of Social Security: Challenges and reforms. Journal of Retirement Administration, 12(2), 50-66.
• Social Security Administration. (2021). Annual Statistical Supplement, 2021. Retrieved from https://www.ssa.gov/policy/docs/statcomps/supplement/