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.
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.
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 and the Social Security Administration's Web site. 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:
- 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 here to prepare their presentation. Additional information can be found here.
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 here.
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 to prepare their presentation. Additional information can be found at here and here.
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 to prepare their presentation.
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 here )
3. Review and document the performance of the trust funds from 1987 to 2005 here. 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 Solman's "Keys to the Lock Box" and "Coming up Short" reports for the NewsHour. (These reports can be presented in a video stream to the class.) Incorporate Mr. Solman'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.
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 The Future Of Social Security Web site to prepare their presentation.
Also check out Paul Solman's post on the future of Social Security and Medicare on his Business Desk blog.
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.
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 or call your local Social Security office.
4. Further analysis of the topic can be found at Public Agenda's Social Security Web site. Here you will find discussion guides, fact files, and choice options to further explore the issue.