Rep. Wasserman Schulz: Privatization Destroys the Progressivity of Social Security

Rep. Wasserman Schultz: PRIVATIZATION DESTROYS THE PROGRESSIVITY OF SOCIAL SECURITY

Rep. Debbie Wasserman Schultz today issued the following statement regarding Social Security reform and the Latino community:

"The privatization of Social Security will disproportionately harm the Latino Community. With 45% of Latino elderly relying on Social Security for 90% or more of their income, the progressivity of the system is of critical importance to the Latino community.

"Under current guidelines, Social Security has been an incredibly effective anti-poverty program because of a formula that replaces a higher percentage of low income earners' wages, giving those who need it most the money to buy groceries and continue to pay their heating bills. Unfortunately, Republicans are pushing, through their privatization, to strip Social Security of its progressivity and shove millions of Americans dependent on Social Security below the poverty line.

"Democrats will fight against destroying the progressivity of Social Security, and will fight to protect our nation's seniors."

Social Security replaces approximately 56% of earnings for low-wage workers compared to 35% for high-wage workers. Private accounts would eliminate this advantage, as well as the existing disability and spousal benefits offered through the Social Security system.

"Latino seniors rely upon Social Security more than any other demographic, and an attack on the progressivity of Social Security is an attack on America's Latino elderly," Rep. Wasserman Schultz continued.

* Latinos earn less, on average, than other populations - $21,600 versus $27,500 for the general population, and thus not only are they unable to save what they need for their own retirement, but Latino families aren't as well equipped to care for their elderly parents and grandparents.

* The average Latino accumulated wealth at retirement is $200,000; markedly lower than any other major demographic. Thus, with low amounts of savings, Latinos tend to rely more heavily on Social Security to get them through each month.

"If President Bush and Congressional Republicans get their way, the Latino seniors who depend on that income will be shortchanged because of an ideologically driven movement to destroy Social Security as an American safety net."

· Because an individual's benefit level of a defined contribution plan under privatization is based upon the ability to contribute over their lifetime, Republicans' plans would help the wealthy get larger Social Security checks while penalizing lower income individuals.

· By not including COLA's in the private accounts, Republicans have found another way to hurt Latino families, especially those feeling the pinch of skyrocketing living costs.

· The GAO, after seeing the immense benefits the progressivity of the system has on the Latino community, issued a warning against disrupting the program. "Reforms that…(tie) benefits more directly to contributions may affect the progressivity of the system and are likely to disproportionately affect equity for minorities as measured in this report. Further, disability, survivors', and dependents' benefits also could be affected by any changes to the structure of the program."

"Democrats do not believe the way to reform our country's greatest tool to combat poverty is to strip out the very provisions that have kept millions out of poverty. We will fight to keep Republicans from trying to institute this ideologically based but morally absent plan.

"Democrats understand the need for low-income senior's to replace a higher percentage of their salary, and we will fight any plan that will throw millions of our country's seniors below the poverty line," Rep. Wasserman Schultz concluded.

http://www.house.gov/apps/list/press/fl20_schultz/SocSecprogressivity.html