Social Security

Social Security
03/03/05

MYTH: President Bush says that there is a "crisis' with regard to Social Security, it is going "bankrupt" and that it will be "flat bust."

FACT: According to the Social Security Actuaries, Social Security has enough money to pay every dollar owed to every eligible American for the next 37 years. In fact Bush has been pedaling this lie for decades. Back in 1978 when President Bush was running for congress in Texas, "he predicted Social Security would go broke in 10 years and said the system should give people 'the chance to invest money the way they feel' is best." The nonpartisan Congressional Budget Office goes even further and projects that Social Security can pay out all of its benefits for the next 47 years, to the year 2052. After that, there will be enough funding available to pay 73 to 80 percent of promised benefits and, with minor adjustments, 100 percent of benefits.

MYTH: President Bush and his allies have stated that Social Security faces a $10-12 trillion shortfall.

FACT: The $10-12 trillion claim is worse than meaningless, it is intentionally deceptive. The figure is calculated based on what would be needed to keep Social Security solvent FOREVER. Not for 75 years. Not for 200 years, or even 500 years, but forever.

MYTH: President Bush and his allies have indicated that workers will do better under his proposal than under the current Social Security plan.

FACT: According to the non-partisan Congressional Budget Office, if Congress makes no changes at all, Social Security will still have enough money to pay a worker born in the 1990s who retires at age 65 a benefit of $18,100 per year. If Congress privatizes Social Security, the benefit for the same worker would be reduced to only $14,500 per year.

MYTH: President Bush and his allies have stated that African-Americans and Hispanics will be better off under his proposal than through the continuation of the traditional Social Security program.

FACT: According to the non-partisan Government Accountability Office, plans to privatize Social Security would likely harm minorities. Moreover, privatizing Social Security would likely reduce disability and survivor benefits, which are particularly beneficial to minorities.

MYTH: President Bush and his allies have strongly implied that the money currently going into Social Security "is your money and that you should have the freedom to invest it where you want."

FACT: The government will strongly limit where people will be able to invest.

MYTH: Bush and his allies suggest that workers will do well because the stock market will provide a consistently higher rate of return than Social Security.

FACT: During the past century, there were fifteen years in which the value of the stock market fell by more than 40 percent over the preceding decade. And, according to the non-partisan General Accountability Office, stock returns were lower than Social Security's annual yield 35 percent of the time from 1950-1996. Perhaps, more importantly, Social Security is an insurance program, not an investment program. It provides insurance against poverty in old age by providing a guaranteed pension, adjusted for wage growth and inflation, not subject to the vagaries of the stock market, for the life of the retiree.

MYTH: President Bush, pushing private accounts in his State of the Union address said: "The money in the account is yours, the government can never take it away."

FACT: The Bush plan would allow workers to take out a 3 percent loan to invest in the stock market at a cost of $4.9 trillion over the next 20 years. In order for workers to receive any money at all under personal accounts, workers would have to receive a rate of return higher than 3 percent to pay back these loans a highly risky proposition. The Bush Administration has admitted that: "In return for the opportunity to get the benefits from the personal account, the person forgoes a certain amount of benefits from the traditional system. Now, the way that election is structured, the person comes out ahead if their personal account exceeds a 3 percent rate of return"-after inflation-"which is the rate of return that the trust fund bonds receive. So, basically, the net effect on an individual's benefits would be zero if his personal account earned a 3 percent rate of return."

MYTH: President Bush and his allies say that private accounts will be voluntary and that people can choose not to participate.

FACT: But the President conveniently forgot to mention that benefits for people who stay in the traditional program will be slashed by 46%. What a choice!

MYTH: The President says that what he is proposing is similar to what members of Congress already have.

FACT: Members of Congress contribute into and receive full Social Security benefits. What they have is above and beyond Social Security which, in fact, should be available to all Americans.

MYTH: In 1950, there were 17 workers for every Social Security beneficiary. Today, there are 3.4 workers for every beneficiary, and by 2030 there will only be 2. President Bush and his supporters claim that this fact alone could be enough to bankrupt Social Security.

FACT: While the retirement of the baby boomers will place increased demands on government budgets in coming decades, this pressure will be offset by the smaller segment of the population comprising children. This change in demographics will lead to savings in education and other government spending that supports children, which currently accounts for approximately 20% of all government spending.

http://bernie.house.gov/statements/20050303180431.asp