Reference no: EM133335967

During the Great Depression, President Franklin D. Roosevelt authorized the creation of several programs and projects to help provide relief for the millions of American citizens living in poverty. One of these programs was Social Security. When the Social Security Act was enacted in August 1935, the main focus was to provide a safety net for disadvantaged, unemployed, or elderly citizens. One major stipulation was that retirees could have benefits based on their lifetime payroll contributions if they were over 65 years of age. Once the Great Depression ended, Social Security continued as a government program and has been amended multiple times to provide greater coverage to more Americans, such as widow(er), children's benefits, and disability.

During the next decade alone, the number of people aged 65 or older is expected to rise by more than one-third, and the share of the population aged 65 or older is projected to grow from the current 15 percent to 21 percent in 2040.

What are the implications of this increase for future federal spending on Social Security and Medicare as a percentage of GDP? Name at least one opportunity cost of those decisions?

What fiscal policies should our government implement to deal with the pending crisis in Social Security and Medicare? (How should we as a country deal with this issue from a fiscal point of view).