Social Security Reform

Introduction:
This series of lessons in four activities explores the purpose, operation, and current issues surrounding the Social Security program. It begins with a basic overview of the program and then students will explore the reasons for the concerns over a shortfall of funding. Students will also examine some of the more popular solutions to address the problems including an in-depth activity on President Bush's proposals for personal accounts and progressive indexing. The activities are build on each other, though with some background explanations, they can be used individually. In nearly all the activities, students are engaged in small group work, group discussions, conducting analysis and drawing conclusions. A culminating activity has students summarizing all they have learned from the activities and expressing their views and providing suggestions for addressing the Social Security problems in a letter to their congresspersons and the president. Grade Level/Subject Areas: middle and high school; civics, personal finance, economics.

Objectives:
The student will -

1. understand the basic operation of the Social Security program and some of the variables that affect its solvency.
2. explore through chart analysis, how the "baby-boom" generation's upcoming inclusion into the Social Security system will affect its solvency.
3. examine several proposed solutions to address the Social Security solvency problems and evaluate the effectiveness of each solution in addressing the problem and on future retirees.
4. examine the plans for personal accounts and progressive indexing of benefits.
5. explore the political positions and posturing between Democrats and Republicans in debating the merits and faults of the two proposals
6. evaluate the effectiveness of each plan on addressing the solvency problems of the program.
7. express their views in a letter to their congressional representatives and the President of the United States on what can be done to address Social Security's problems.

Time Needed for Completion:
3 to 5 class periods (each activity can be done separately in about one class period)

Materials:
Access to the Internet

Student Handout: (Adobe Acrobat required)

• "Social Security - A Simple Concept"
• "The Future of Social Security"
• "Possible Solutions for Social Security"
• "Personal Accounts"
• "Progressive Indexing"

Online Reading:

• "Some Ways to fix Social Security" from The Washington Times:
  http://washingtontimes.com/upi-breaking/20040419-123716-5298r.htm
• "Choices Lie Ahead" from the Social Security Administration:
  http://www.ssa.gov/pubs/10055.html#choices
• Transcript on personal accounts from Washington Week: http://www.pbs.org/weta/washingtonweek/transcripts/
  transcript010727.html
• Transcript on progressive indexing from Washington Week: http://www.pbs.org/weta/washingtonweek/transcripts/
  transcript050429.html

Large sheets of butcher paper and felt pens.

Procedure:
Opening/warm-up activity:
Place the following prompt on the board or overhead: "How will you financially prepare for your retirement?" Have students pair up and respond to the question by sharing their plan. Then select a few individuals to explain what financial preparation their partner plans for retirement. Record these ideas on the board. Ask students what they know about the Social Security System. What is it? How does it work? When was it enacted? What is going on with it now? What questions do they have about it? Then tell students they are going to do some activities to better help them understand the system, some of the concerns people have about its future, and some plans being discussed to address these concerns. Background information on the Social Security Administration can be found at http://www.socialsecurity.gov/history/history.html

Activity
I: Social Security - A Simple Concept

1. Distribute the handout "Social Security - A Simple Concept."(Adobe Acrobat required)
2. Have students work in small groups to review the reading material and answer the discussion questions.
3. Ask selected students to respond to the questions.

Discussion questions:

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. Workers are taxed on the first $90,000 of their wages. What would be the effect on income to the Trust Fund if this level was raised or lowered?
3. Who are the recipients of social security benefits?
4. What is the impact on incoming funds if the payroll tax is raised as it was in 1983 from 5.4% to 6.2%?

II: The Future of Social Security

1. Divide the class into small groups of 3-5 students.
2. Distribute the student handout "The Future of Social Security."(Adobe Acrobat required)
3. Review with students the graphs, charts and content of the handout. Have students examine the four charts and corresponding captions on the handout. Ask students for any clarification questions before they begin the discussion questions.

Discussion Questions: (answers in italics)

1. Chart #1 shows the income and outgo of funds in the Social Security trust funds. Where does the income come from and to whom are the outgo payments made? Income comes from employee and employers at 6.2% each. Outgo goes to people retired, disabled, survivors of deceased workers, and dependents of beneficiaries.
2. In 2005, what was the status of the trust funds (how much was coming in and going out and what was the surplus amount)? Approximately $152 billion income; $138 billion outgo.
3. Chart #2 shows the increasing numbers of Social Security beneficiaries. What has caused the sharp increase of beneficiaries from 2000 to 2020? More retirees from the baby-boom generation and people living longer. What is the projection of this increase beyond 2020? It will get much larger.
4. How might this increase effect the income and outgo chart in #1? It will decrease the amount of income and increase the amount of outgo.
5. Chart #3 shows the number of people paying into the system in relation to the number of people receiving benefits. What is happening in this chart? The ratio of workers paying into the system is decreasing compared to the number of people receiving benefits.
6. What effect will this decrease in workers paying into the system have on Chart #1? Less money will be contributed to the trust funds. How has the increased number of beneficiaries in chart #2 affected the worker to beneficiary ratio in chart #3? It has caused the ratio to decrease from 5:1 workers to eventually 2:1 or less.
7. Chart #4 shows the amount of funds in the Social Security trust fund to pay future beneficiaries. What factors featured in charts 2 and 3 will contribute to the down turn in funds that occurs beginning in 2020? More people retiring and fewer workers contributing into the system.
8. How will the reduction in the trust fund after 2020 affect the surplus in Chart #1? It will lower the amount of income and reduce the surplus so that the system will be able to meet only 73% of its benefit obligation by 2035.
9. What conclusions can you make about the future of Social Security as a workable retirement option for many Americans? Answers will vary, but most will see that the system cannot continue to work as it is without some kind of reform or adjustment.
10. What recommendations would you make to Congress to help ease some these problems? Answers will vary.

III: Possible Solutions
In this activity students will look at some of the possible remedies to address Social Security's problems. Mention to students that there are a several actions or combinations of actions government can do to address the upcoming decline in the Trust Fund. They will be examining some of these looking for how each action might help solve the problem and some of the positives and negatives of each action.

1. To begin this lesson, review with students some of the problems facing the Social Security system in the future. Mention the possible decline in the trust funds the system will face in 2020 and ask them what factors will cause this loss of funds. Ask them what will happen if the social security funding issue is not addressed.
2. Divide class into seven groups.
3. Distribute the student handout "Possible Solutions for Social Security." (Adobe Acrobat required)
   Explain to them that the attached chart contains a list of possible solutions to address the Social Security problems. Review these with the class to make sure they understand what each action is.
4. With students working in their groups, have them complete the "Intended Result" column first. If necessary, give them some assistance on how each action would help address the problem of reductions in the Social Security Trust Fund.
5. Next, pass out the two articles "Some ways to fix Social Security" at http://washingtontimes.com/upi-breaking/20040419-123716-5298r.htm and the Social Security Administration's website at http://www.ssa.gov/pubs/10055.html#choices to each group with half the group reviewing one article and the other half reviewing the other. (This could be done earlier as a homework assignment.)
6. Then have them work in their groups to discuss the pluses and minuses of each proposed plan with members who read the other article. Further information can be found on the web. Tell students in writing their explanations of positive and negative effects on the chart, they should cite any evidence or examples to support their analysis.
7. Assign one of the solutions to each group. Have students develop a brief presentation on that solution covering the information from the analysis chart. The can go to other sources, like the ones listed below, for more in-depth information. Then have them discuss the following questions and incorporate their discussions into their presentations. Students should compile their findings on a large sheet of butcher paper with felt pens. Then have each group present their findings.

• Which segment of society would be most affected by the proposed solution? " Identify the positive and negative effects on this group.
• Is this plan a better or worse plan than the others suggested?
• What plan or combination of plans is better and how would you incorporate them into a Social Security reform plan?

Possible sources of further information:
Social Security Administration
http://www.socialsecurity.gov
Public Agenda on Social Security http://www.publicagenda.org/specialcoverage/frontdoor.cfm?issue_type=ss
Common Sense on Social Security
http://www.sscommonsense.org/
AARP
http://www.aarp.org/money/social_security/

IV: Focus on the President's Plans for Personal Accounts and Progressive Indexing
This lesson is in two parts, one for students to examine the proposed personal accounts program and the other to look at the progressive indexing plan recently presented by President Bush. In these activities students will be working in groups to review the basic operation of personal accounts and personal indexing. Then they will review panel discussion transcripts from past Washington Week programs. After their analysis, they will conduct a roundtable discussion on the problems and proposed solutions to the Social Security crisis and some ways to deal with the highly charged political aspects of the issue. Finally, they can "take their ideas to their congressman" (or woman) or the President by writing a letter to their elected leaders.

PART I Personal Accounts:
Procedure:

1. Distribute the student handout "Personal Accounts"(Adobe Acrobat required) to all students. Review with them the proposed plan and clarify any details.
2. Then divide the class into four groups.
3. Prior to class you will need to download the transcripts from recent Washington Week programs on personal accounts and progressive indexing.
   
   For the transcripts on personal accounts go to http://www.pbs.org/weta/washingtonweek/transcripts/
   transcript010727.html.
   Once there, scroll down to "Analysis: the Future of Social Security." You can also access a video clip of the discussion by clicking "Watch This Week's Show" at the top of the page and scrolling down to "Social Security Remains Hot Button Issue."
   
   For the transcripts on progressive indexing go to http://www.pbs.org/weta/washingtonweek/transcripts/
   transcript050429.html.
   Once there, scroll down to "Social Security Reform." You can also access a video clip of the discussion by clicking "Watch This Week's Show" at the top of the page and click "Social Security Reform Goes Prime Time."
   
   
4. Have students review the transcripts to personal accounts first. Distribute the transcript from Washington Week's discussions on personal accounts.
5. Tell students to turn to the second page of the student handout and review the instructions in their small groups. Students are to work in their groups to complete the chart. Each member of the group is to complete one of the segment boxes on the data gathering chart. Their notes are to be complete and detailed and they can use an extra sheet of paper if necessary. Once a student has finished, they should help other students in their group finish their portion of the chart.
   
   You may wish use the following prompts to help students be complete in their answer boxes:
   The bi-partisan commission:
   A. The political make-up of the commission.
   B. The plan they developed.
   C. The controversy around the commission members' initial view of personal accounts.
   D. The effect of the personal accounts plan in addressing the problems of long-term financing of Social Security.
   
   Democrats views on the commission's plan:
   A. Summarize Democrats' views on personal accounts.
   B. Why they feel it could bring less money to beneficiaries?
   C. How Democrats' views on personal accounts have changed since he too office. "
   
   Republicans' mixed views on the Presidents' personal accounts plan:
   A. How plan would benefit women and minorities.
   B. The concerns many Republicans (and Democrats) have about changing the Social Security program.
   C. The views of some Republicans on the Democrats' opposition to the private accounts plan and the reasons why.
   
   Older and Younger citizens' views on the personal accounts plan: A. Over 55 years old citizens' viewpoints on Social Security.
   B. Under 55 years old citizens' viewpoints on Social Security.
   C. How have the individual histories of these two groups possibly influenced their thinking?
   
   
6. Then have students engage in discussion on the review questions:
   

• Why were Democrats unreceptive to the report by the President's commission on Social Security?
• What are the costs and benefits of workers investing part of their Social Security contributions into personal accounts?
• Will personal accounts program help solve the long-term funding problem facing Social Security? Explain your answer.
• What are some of the political messages both supporters and detractors have presented to best promote their view of the personal accounts plan?
• Where do you feel each side has fallen short in convincing the American people of their respective view of personal accounts?

PART II: Progressive indexing plan
In this activity students will examine President Bush's plan for addressing the shortfall in the Social Security system. Students will look at the plan, its effects on different levels of income and then assess its effectiveness.

Procedure:

1. Keep students in the same small groups of four they were in earlier.
2. Distribute student handout "Progressive Indexing"(Adobe Acrobat required) to all students.
3. Review with them the overview, the plan, and the Workers Benefits chart.
4. Have them work in their groups to review the discussion questions.
   A. Which segment of society would be most affected by the proposed solution?
   B. Identify the positive and negative effects on this group.
   C. Is this plan a better or worse plan than the others suggested in the earlier activity?
   D. What plan or combination of plans is better and how would you incorporate them into a Social Security reform plan?
   
   
5. Next have students review the transcript to a recent Washington Week program discussing the progressive indexing plan and the political aspects of this plan.
6. After students have reviewed the transcripts, have each group engage in the following round table discussion:
   A. As noted in your reading, the personal account plan does not solve the long-term funding problems facing Social Security. However, is the plan for investing in personal accounts a possible solution for addressing this problem? Why, or why not.
   B. Examine how well the progressive indexing plan would help address Social Security's proposed shortfalls. Would the program be better when coupled with the personal accounts for middle and higher income level workers?
   C. Supporters of personal accounts feel the plan provides more funds for beneficiaries when they retire than Social Security alone. Detractors feel investing in the stock market is too risky for people's future retirement. Supporters of the progressive indexing plan say it will help the poor and bring the Social Security funding crisis under control. Detractors of the progressive indexing plan say the program is a blow to the middle class who will suffer greatly if it is implemented. How would you address the two sides (supporters and detractors) on this issue to get them to come to a compromise?
   
   
7. Conclude this activity by having the students write a letter to their senators, representatives, or the President on how best to resolve the issue. They may send this letter to their senators through the senators' websites found at http://www.senate.gov/general/contact_information
   /senators_cfm.cfm
   For letters to their representatives, go to: http://www.house.gov/writerep/
   Letters to the President can be sent to:
   The White House 1600 Pennsylvania Avenue NW Washington, DC 20500 Email: president@whitehouse.gov

Assessment Suggestions:

1. Each of the handouts that explain the operation and potential solvency problems contain knowledge-based information that can be developed into comprehension questions or chart fill-in assessments.
2. Create an authentic assessment of students understanding of the issues surrounding Social Security by having students present the effects of the "baby-boom" generation and then presenting the proposed solutions in a poster presentation or media commercial.
3. Have students write essay answers to questions surrounding the effectiveness of all the solutions proposed including personal accounts and progressive indexing.
4. Set up debate teams to discuss President Bush's plans for Social Security.

Extensions:

1. Ask someone from the local Social Security 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 website http://www.ssa.gov/organizations/ or call your local Social Security office.
2. Further analysis of the topic can be found at Public Agenda's website http://www.publicagenda.org/specialcoverage/frontdoor.cfm?issue_type=ss. Here you will find discussion guides, fact files, and choice options to further explore the issue.
3. Develop a website or newsletter that presents the different solutions for addressing Social Security's solvency issues and rate them as to their effectiveness.
4. Conduct a poll of your school population's knowledge and understanding of the Social Security problems. Then create and distribute brochures informing people of the problems and possible solutions for addressing Social Security's problems.

Standards:
McRel K-12 Standards Addressed:

Civics
Standard 20: Understands the roles of political parties, campaigns, elections, and associations and groups in American politics

Economics
Standard 6/Level 4/Benchmark 2: Understands that most federal tax revenue comes from personal income and payroll taxes, and these taxes are used to fund social security payments, the costs of national defense, medical expenditures, and interest payments on the national debt.

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:
How Social Security Operates operates:
Social Security Administration http://www.ssa.gov/pubs/10024.html#simpleconcept or http://www.ssa.gov/OACT/ProgData/fundFAQ.html
PBS Newshour http://www.pbs.org/newshour/bb/social_security/reform/index.html

Possible problems with Social Security
Social Security Administration http://www.ssa.gov/pubs/10055.html#demographics
Public Agenda http://www.publicagenda.org/specialcoverage/overview.cfm?issue_type=ss

Possible Solutions to address Social Security's future problems: Washington Times "Some ways to Fix Social Security" http://washingtontimes.com/upi-breaking/20040419-123716-5298r.htm Social Security Administration's website at http://www.ssa.gov/pubs/10055.html#choices
Public Agenda http://www.publicagenda.org/specialcoverage/frontdoor.cfm?issue_type=ss
Common Sense on Social Security
http://www.sscommonsense.org/
AARP
http://www.aarp.org/money/social_security/

Personal Accounts
Newshour http://www.pbs.org/newshour/bb/social_security/reform/index.html
White House
http://www.whitehouse.gov/infocus/social-security/

Progressive Indexing:
USATODAY
http://www.usatoday.com/news/washington/
2005-04-28-bush-ss-plan_x.htm
CNN/MONEY
http://money.cnn.com/news/specials/socsec/
FactCheck.org
http://www.factcheck.org/article323.html
Center on Budget Policy and Priorities
http://www.cbpp.org/3-21-05socsec.htm
Heritage Foundation http://www.heritage.org/research/socialsecurity/briefing.cfm
Brookings Institute http://www.brookings.edu/comm/policybriefs/pb126.htm

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 US Constitution related issues. He is a member of the Board of Directors of the Oregon Council for the Social studies.

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