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LESSON PLAN: HOW SECURE IS SOCIAL SECURITY?
By Greg Timmons, teacher and Executive Director of The Constitution Project in Portland, Oregon

Subjects: government, social studies, history, economics

Time: 3 class periods

Lesson Objectives:
1. Students will understand the history of the Social Security system as it has evolved to meet the needs of retirees.
2. Students will understand how the Social Security program benefits the retirees.
3. Students will examine how the changing demographics of workers and upcoming swell of retirees has caused problems for future generations and called for changes in the system.
4. Students will understand the "lock box" concept of trust funds and determine how solvent this funding is.
5. Students will examine and evaluate the effectiveness of several proposals being considered to help ensure ample future funding of the Social Security program, including President Bush's "personal account" proposal.
6. Students will understand that the debate surrounding Social Security reform is highly politicized with rhetoric and political posturing accompanying the process of addressing the problems with the Social Security program.

Overview:
The lesson is divided into five parts, with student groups conducting research on one aspect of the Social Security program, developing presentations and sharing their findings with the class. However, the lesson's structure allows teachers to modify the material to suit their classroom needs as necessary. The main goal of the lesson is to provide students with enough information about Social Security's operation and projected problems to make informed conclusions on how to address these problems. The lesson can be extended further with any of the Extension Activities that follow.

Background
This lesson will provide students a solid understanding of the Social Security program, its history and operation and some of the current problems it is facing. It will also give students the opportunity to examine the effectiveness of several possible solutions including President Bush's proposal to set up "personal accounts." The concept of personal accounts is not new. Congress debated the idea before the program was enacted in 1935. Other politicians from Barry Goldwater to Bill Clinton have promoted this option in some form. President Bush has made it a cornerstone of his second term in what journalist Richard Stevenson of the New York Times calls, "…one of the biggest gambles of Mr. Bush's political career." No matter how it's decided the political underpinnings are most evident. The President's desire to change Social Security intersects with conservative interest groups' desire to have less government involvement in the finances and affairs of private citizens. However, for many, such a change would challenge the fundamental philosophical assumption of President Roosevelt's New Deal, regarding the relationship between individuals and their government. For Americans witnessing and participating in the debate, it will be important they understand the problems the Social Security program faces and how any of the proposed solutions will effectively address them.


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Correlation to National Standards

Materials Needed

Procedure:

PART I: Opening Activity: (approx.. 15 minutes)

1. Have students work in small groups to answer the following questions you put on the board or an overhead: What is Social Security? Where does the money come from to pay for this program? What do you know of the status of this program at this time?

2. Pass out Handout "Pay Check Stub." Review with students the parts of the form for gross pay and deductions. Point out the yellow highlighted section on Social Security and tell them this deduction is to fund the federal retirement program also sometimes known as FICA when it includes the tax on Medicare. Ask them to figure how much this deduction is from the pay check. (6.2%). Mention that the employer is also obligated to contribute 6.2% to this fund. Then ask them if they believe they will receive any of this money when they retire.

PART II: A close look at the Social Security program (Group questions in this section also found in the student handouts listed in the "Materials Needed" section.)

1. Explain to students that they are now going to examine the history of the Social Security program, how it works, the concerns around the program meeting its future obligations, and the plans being proposed to address this concern. Much of the content material for this lesson was taken from the NewsHour's Social Security Reform Web site at http://www.pbs.org/newshour/bb/social_security/reform/index.html and the Social Security Administration's Web site at http://www.ssa.gov. However, some of the questions require further research and links to other Web sites have been provided.

2. Divide the class into the following five groups:

  • Historians
  • Operations
  • Problem analyzers
  • Solution providers
  • The President's Proposal

3. Each group will be responsible for completing each of the questions in their sections. They can conduct their research from the Web sites listed in their questions or from other sources. Be sure to review any other sources with them to ensure their credibility. When groups have finished their research, they are to construct a presentation to the class on their findings. Encourage students to create presentations with visual aids such as flow charts, graphs or diagrams to help their classmates understand the complexities of the Social Security system and the various plans being discussed to strengthen its future.

Group 1: HISTORIANS
This group will research the history of the Social Security program, reporting on the reasons the program was instituted, what benefits it provided and some of its provisions to help meet people's retirement needs. Students are encouraged to develop visual aids to assist in their presentation. Have students review the Social Security Timeline found at http://www.pbs.org/newshour/bb/social_security/reform/timeline.html to prepare their presentation. Additional information can be found at http://www.ssa.gov/history/.

1. State when and explain why the Social Security Act was instituted. What kinds of problems were Americans facing during the Great Depression that led to this law?
2. State when Social Security benefits were first expanded and in what areas. Also, explain the change that occurred in how people received their retirement money.
3. State when the first cost-of-living adjustment (COLA) was enacted. Explain why this adjustment was made and identify the years other COLA adjustments were made?
4. Record the dates and details of other Social Security program expansions such as adding benefits for permanently and totally disabled workers or extending health coverage.
5. From the very beginning, funds for the Social Security program have come from a payroll tax. State the original percentage workers and employees had to contribute to the fund and the dates and amounts of subsequent increases to this payroll tax.
6. In 1981, President Ronald Reagan and Congress created the Greenspan Commission to study the Social Security program's financial problems and make recommendations. Describe the changes Congress put into place to help strengthen the program and how these actions would help strengthen the program. For further information on the provisions of the 1983 legislation, go to the Social Security Administration's History Web site at http://www.ssa.gov/history/1983amend.html.

Group 2: OPERATIONS
This group will report on how the Social Security program works; how contributions are made, where they are "stored," and how benefits are disbursed. Students are encouraged to develop visual aids to assist in their presentation. Have students review the Social Security Basics at http://www.pbs.org/newshour/bb/social_security/reform/faq_flash.html to prepare their presentation. Additional information can be found at http://www.ssa.gov/pubs/simpleconcept and at http://www.ssa.gov/OACT/ProgData/fundFAQ.html.

1. Describe how the Social Security works? (Explain how contributions are made, how the "pay-as-you-go system" works and how recipients receive their benefits.)
2. Explain why the Social Security system was created?
3. Explain the significance of the numbers on the Social Security card.
4. Describe the different types of benefits available to individuals.
5. Explain how the Medicare program fits into the picture (Explain how it relates to FICA and how contributions to Social Security taxes are divided up between Social Security and Medicare.)
6. Develop a chart or other visual device that explains how the Social Security Trust funds work. (Explain what they are, how they are created, and when they are predicted to be unable to meet their obligations.)

Group 3: PROBLEM ANALYZERS
This group will report in detail the problems currently facing the Social Security program. Students will explain the trust fund system and how increases in the number of retirees will cause shortfalls in the system's ability to pay out benefits. Students are encouraged to develop visual aids to assist in their presentation. Have students review The Future of Social Security at http://www.ssa.gov/pubs/10055.html to prepare their presentation. Additional information can be found at http://www.pbs.org/newshour/bb/social_security/reform/FAQ_flash.html and other sources listed below.

1. Briefly review how the trust fund program works.
2. Explain how trust funds are invested and what happens to taxes that go into the trust funds. (Additional resources at http://www.ssa.gov/OACT/ProgData/fundFAQ.html)
3. Review and document the performance of the trust funds from 1987 to 2005 http://www.ssa.gov/OACT/ProgData/assets.html. Show the income growth during this time and how the difference between the "Income" and "Outgo" of funds has created a surplus.
4. Explain how changing demographics (the "Baby-boom" generation) has created a need for changes in the Social Security system.
5. Develop a chart like the one shown in question three that illustrates the projected shortfalls of the program over the next 75 years.
6. Review Paul Solomon's report "Keys to the Lock Box" http://www.pbs.org/newshour/bb/economy/july-dec01/lockbox_8-22.html and "Coming up Short" http://www.pbs.org/newshour/bb/social_security/july-dec04/deficit_10-12.html reports for the Newshour. (These reports can be presented in a video stream to the class.) Incorporate Mr. Solomon's explanation of the "special issue" securities as government IOUs onto your report and answer the question as to whether these funds will ever be available to future retirees.

Additional charts can be found on Public Agenda's Web site at http://www.publicagenda.org/issues/factfiles.cfm?issue_type=ss

Group 4: SOLUTION PROVIDERS
This group lists and explains several different proposals to address the Social Security problem. Students are encouraged to develop visual aids to assist in their presentation. Have students review the potential solutions for Social Security at http://www.ssa.gov/pubs/10055.html#choices to prepare their presentation. Additional information can be found at http://washingtontimes.com/upi-breaking/20040419-123716-5298r.htm

Students should review each of the following suggested solutions from the source links above. They should describe each solution; provide an example of how each will work to address the problem, and what critics say about each suggested solution.

  • Reduce benefits or slow down their increases
  • Raise the payroll tax rate above 12.4%
  • Raise the payroll tax cap above the first $90,000 in a wage-earner's salary
  • Raise the taxes on Social Security benefits
  • Raise the retirement age
  • Levy an additional tax on state and local governments
  • Government invests Social Security reserves in stocks and bonds.

Group 5: THE PRESIDENT'S PROPOSAL
This group will report on President Bush's proposal to address the Social Security problems. Students are encouraged to develop visual aids to assist in their presentation. Have students review the plan at http://www.pbs.org/newshour/bb/social_security/reform/accounts.html to prepare their presentation. Additional information can be found at http://www.whitehouse.gov/infocus/social-security/.

1. Describe the President's personal accounts proposal and explain how it is philosophically part of the "ownership society" promoted in his second term agenda.
2. Briefly describe the history of this idea and why it wasn't instituted when Social Security was first established.
3. Describe the three proposals generated by the President's Commission to Strengthen Social Security developed in 2001.
4. Focusing on Model Two, the one preferred by the Bush Administration, describe the higher level of benefits future retirees would receive over the current system. Describe how workers' money would be invested in the two-tiered system envisioned by the president's commission and explain why supporters of this plan believe it reduces the risk of investing in the stock market.
5. Currently, employees and employers together pay 12.4% of gross income (income before taxes) into the Social Security system for a worker's retirement. Under the personal accounts model, 4% of gross income would go into a private account and 8.4% would go in to the existing Social Security system to pay the benefits of current retirees. Describe the "transition costs" this plan would create and where the money would come from to pay for them.
6. Describe what critics say about investing Social Security contributions in the stock market, reducing the amount of funds available from 12.4% to 8.4% to pay for current retirees, and the overall costs of funding the personal accounts plan.

PART III: Drawing the Battle Lines - Debriefing Questions:

There are many different perspectives on the issue of the Social Security program as the article in the NewsHour's Social Security Reform Web site shows http://www.pbs.org/newshour/bb/social_security/reform/battle_lines.html. The following activity is designed to be used as debriefing questions for all students after their presentations. It contains quotes from those deeply involved in the debate. It can be conducted in a full class or as small group work. It can also be used as an assessment tool for group projects or individual assignments. Extensions activities to further explore the issue can be found in the Extension Activities section.

Discussion Questions:
The following quotes best articulate the feelings and attitudes of many of those closely involved in the debate to address the Social Security issue. Have students review each and comment on:

  • the statement's meaning on the issue of Social Security reform,
  • the statement's position taken in relationship to the opposing side's view point
  • whether the statement provides substance or political rhetoric

President George Bush: "I like the idea of encouraging more people to say, I own my own home, I own my own business, I own and manage my health accounts, and now I own a significant part of my retirement account." "Trying to fix the system by raising taxes would only buy time, and then future generations would need to come back and raise taxes again and again."

Senator Edward Kennedy, (D-MASS): "We will not let any president turn the American dream into a nightmare for senior citizens and a bonanza for Wall Street. The biggest threat to Social Security today is not the retirement of the baby boomers. It's George Bush and the Republican Party."

Vice President Dick Cheney: "We need to remember that raising taxes will not fix the current system as long as the costs continue to rise relative to the size of income that could be taxed. Trying to fix the system by raising taxes would only buy time, and then future generations would need to come back and raise taxes again and again."

Senator Olympia Snow (R-Maine): "I'm certainly not going to support diverting $2 trillion from Social Security into creating personal savings accounts. The existing program, as it has been developed in the last 70 years, provides a stable monthly income that has prevented seniors, almost 50 percent from falling into poverty. I don't think we want to erode the principles of that system."

Marie Smith and Bill Novelli of AARP: "Most of us would then have to pay twice to gamble on this [the personal accounts] new plan -- first to keep our commitments to current retirees and again to pay into these private accounts. Some critics of these personal accounts think that Wall Street, not retirees, would be the real beneficiaries."

Extension Activities

1. Interview someone on SS or close to retirement for their opinion. Write an article on their views and what you learned from them and them from you.

2. Develop a Web site or newsletter with all the info gathered from the class presentations.

3. Ask someone from the local SS administration to come in and talk to the class. Develop a list of questions from the class prior to their arrival. The Social Security Administration seeks opportunities to communicate with the public about important issues surrounding Social Security. Speakers are available nationwide for conferences, seminars, classrooms, workshops, etc. If you are interested in having an Social Security representative speak in your class go to this Web site http://www.ssa.gov/organizations/ or call your local Social Security office.

4. Further analysis of the topic can be found at Public Agenda's Web site http://www.publicagenda.org/issues/frontdoor.cfm?issue_type=Ss Here you will find discussion guides, fact files, and choice options to further explore the issue.


Correlation to National Standards
McRel K-12 Standards Addressed:

Civics
Standard 5: Understands the major characteristics of systems of shared powers and of parliamentary systems
Standard 20: Understands the roles of political parties, campaigns, elections, and
associations and groups in American politics

Language Arts

Reading
Standard 7: Uses reading skills and strategies to understand and interpret a variety of informational texts

Listening and Speaking
Standard 8: Uses listening and speaking strategies for different purposes

Working with Others
Standard 1: Contributes to the overall effort of a group
Standard 4: Displays effective interpersonal communication skills

Resources:
Social Security Administration http://www.ssa.gov/
The White House - http://www.whitehouse.gov
Cato Institute - http://www.cato.org/
Brookings Institution - http://www.brook.edu/
Public Agenda - http://www.publicagenda.org/
Media Matters for America - http://mediamatters.org/
Just Facts http://www.justfacts.com/
American Association of Retired Persons (AARP) http://www.aarp.org/socialsecurity

About the Author Greg Timmons is a teacher, curriculum writer and Executive Director of The Constitution Project in Portland, Oregon. He has taught middle school and secondary Social Studies for over 30 years, wrote lessons, and directed institutes on U.S. Constitution related issues. He is a member of the Board of Directors of the Oregon Council for the Social studies.

To find out more about opportunities to contribute to this site, contact Leah Clapman at extra@newshour.org.

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