Public Finance-Social Security Insolvency Essay

Public Finance-Social Security Insolvency - Essay Example At the initial stage of this program, permanently disabled soldiers and widows of soldiers were given the benefits of social security policies. The most noted disadvantage of this program is that it had not designed any provisions for the Confederate side veterans and families. In order to remove the inefficiencies of the program and to coordinate the whole unions of soldiers, this program was restructured later and thereby all unions of soldiers got the benefit of the program regardless of the intensity of their injuries. Due to the expansion of the program, the federal government was driven to spend more than one third of its funds to meet the military pensions in 1984. The United States was shaken by the great depression of 1930 when millions of Americans lost their jobs and struggled to meet the livelihood. The event prompted the thoughts of a comprehensive social security system for the survival of the weakest in times of such severe situations. Franklin Roosevelt became the pre sident of America in 1932 and the depression was at its intense stage in this period. He was the first person who suggested an idea of social insurance in America although it was characterized by several weak aspects. Roosevelt’s idea was the milestone in the history of social security programs and it was molded into its present form subsequent to various amendments of Roosevelt’s basic frame. ... This plan persuaded the workers to set aside a specified percentage of their income to a separate account so that they can use this amount to meet the monthly expenses after retirement. Subsequently, Social Security Act (SSA) came into force in 1935. Since 1935 the SSA system has been exercising in US with relevant modifications in accordance with changing economic situations and population of the country. Currently, social security system in United States is known as Federal Old-Age, Survivors, and Disability Insurance (OASDI) program. Deaven and Andrews (vii) lists other social security programs which include â€Å"Unemployment Insurance, Temporary Assistance to Needy families, Health Insurance for Aged and Disabled (Medicare), Grants to States for Medical Assistance Programs (Medicaid), State Children’s Health Insurance programs (SCHIP), and Supplemental Security Income (SSI). 2. Causes of the anticipated insolvency: Anticipated insolvency or expected insolvency is a threa t to business as it leads the business to failure in the near future. Insolvency may occur in small businesses as well as in big businesses although small business ventures have more possibility to confront with it. There are large numbers of causes for anticipated insolvency. Lack of working capital is the main cause of anticipated insolvency as it interrupts the smooth running of the business (The 65 most common reasons for business failure). The inadequate capital resources cause to diminish the management incompetence which is the catalyst that leads the business upwards. The thoughtless managerial decisions, unfair issue of credits, and unnecessary purchases are the major factors which create the situation of capital deficiency. Unforeseen contingencies like floods,