Stopping the Privatization of Social Security

Stopping the Privatization of Social Security
12/12/2005

Today is a very good day. Despite a major effort on the part of the Bush Administration, the Republican Leadership, right-wing think tanks and Wall Street the American people have stood up, fought back, and have defeated the effort to privatize Social Security. I want to congratulate the AARP in Vermont and throughout this country for playing a leading role in this very important struggle, as well as other senior citizen groups. In that regard I am very proud to accept the petitions of 8,000 Vermont AARP members who want me to continue my efforts to oppose privatization. You can be absolutely certain that that is exactly what I will be doing. I also want to say, however, that while we have won the political battle on this issue, the war is far from over. There is no doubt in my mind that those who engineered this campaign to privatize Social Security will be back when they believe the time is right, which is why we have to remain absolutely vigilant. Grass-roots America has won this battle against right-wing extremists, but we must not let up for one second or this victory will be snatched away.

In a very unstable economy, and at a time when workers all over this country are worried about whether the pensions promised to them will, in fact, be there - it is imperative that we defend a program that has been enormously successful since its inception - and which has kept its promise to the American people. For the last 70 years every American who has been eligible for Social Security has received what they were entitled to - when the economy was strong or weak, or whether the stock market was up or down. That's what the "security" in Social Security is about, that's why we have to maintain it and strengthen it, and that's why we have got to continue our grass-roots efforts to oppose privatization.

Despite President Bush's assertions, Social Security is not going "bankrupt" and independent studies prove conclusively that there is no Social Security "crisis." According to recent studies if Congress does nothing (and I certainly hope that Congress will take action) Social Security will pay out every dollar owed to every eligible American for the next 37 - 47 years. After that, there will be enough funding available to pay out 80 percent of promised benefits and, with minor adjustments, 100 percent of benefits. That hardly matches the doom and gloom predictions that those who want to "fix" Social Security are making.

Let's be clear. Social Security has been the most successful anti-poverty program in American history. During the last 70 or so years, whether the economy was strong or weak, whether the stock market was up or down, every eligible American received every nickel that he or she was entitled to. As recently as 1960, half our seniors were officially poor. Now, largely because of increases in Social Security, only 10 percent are. We should not begin dismantling a program that has been extraordinarily successful in providing dignity not only for older Americans, but also for millions of others who are disabled and who receive survivors' benefits.

The truth is that the changes that the Bush administration wants to make to Social Security -- allowing people to divert their Social Security taxes into new privatization accounts -- will make Social Security less financially sound. In fact, estimates are that privatizing Social Security will cause an additional $2 trillion shortfall in the Social Security system which can only be made up by increasing the national debt or taxes.

Not only will privatization accounts make Social Security less sound, it will also hurt the financial well-being of America's seniors. That is why the President's proposal is being opposed by all of the major senior citizen organizations including AARP, the National Committee to Preserve Social Security and Medicare and the Association of Retired Americans. If the President is successful, estimates are that future Social Security benefits will be cut by up to 40 percent. Further, the President indicated in his State of the Union address that he was open to raising the retirement age.

We must never forget that Social Security is a social insurance program. It guarantees benefits to all who participate, unlike privatization accounts that are at the mercy of swings in the stock and bond markets. If people want to take the risks involved in investing in Wall Street, and millions do, they have every right in the world to do so. But that's not what Social Security was set up to do.

Not too surprisingly, investment firms on Wall Street spent tens of millions in lobbying and advertising for the creation of these privatized accounts. They think privatization is a great idea because they stand to make hundreds of billions by managing the money in those accounts.

Will some people make more by having their money in a privatization account even with a 40 percent cut in their Social Security benefits? According to the independent Congressional Budget Office workers will be worse off. For example, under the Bush plan the CBO estimates that workers born in 2000 and retiring in 2065 will lose $111,900, or 37 percent of their scheduled benefits even after accounting for income from private accounts. In addition, unlike private accounts, Social Security provides uninterrupted benefits for life. That means women will be particularly hard hit by moving toward privatization because they tend to live longer than men.

The fact that Social Security is not in "crisis" and is not going "bankrupt" doesn't mean that the Congress should do nothing. In my view, over the next several years Congress should take a hard look at Social Security to make sure that it is strong and solvent not just for the next 37 or 47 years, as it is now, but even further into the future.

One proposal being seriously considered is to lift the cap, currently at $90,000, on earnings subject to the Social Security tax. Currently, a multi-millionaire pays exactly the same amount of Social Security taxes as someone making $90,000 a year. An individual making $13 million a year is finished paying his social security payroll tax in two days. According to a recent report by Social Security actuaries, lifting that cap would eliminate the projected shortfall and allow the system to remain solvent for the next 75 years -- which is traditionally as far into the future as actuaries project.

Social Security does not face a financial crisis. It faces a political crisis. If Congress is prepared to stand up to the powerful special interests who want to destroy Social Security, we can easily find a solution so that our children and grandchildren will be able to enjoy the guarantees and benefits of this enormously successful program.

http://bernie.house.gov/documents/document.asp?issueNum=4704