Durbin: Privatizing Social Security Will Mean Big Benefit Cuts and Billions in New Debt
DURBIN: PRIVATIZING SOCIAL SECURITY WILL MEAN BIG BENEFIT CUTS AND BILLIONS IN NEW DEBT
"Fix it, Don't Nix it," Senator says
Monday, March 7, 2005
[SPRINGFIELD, IL] - President Bush's proposal to privatize Social Security would mean substantial benefit cuts for retirees and trillions of dollars in additional debt for all Americans, and it would make social security's long-term solvency challenge worse, U.S. Senator Dick Durbin (D-IL) said during a town hall meeting in Springfield. Durbin called the town hall meeting to hear from Springfield residents about what Social Security means to them and what they think ought to be done to preserve and strengthen it for years to come.
"Social Security is the bedrock of every American's retirement security," said Durbin. "We should fix it, not nix it."
"Even if we make no changes, Social Security will continue to make every single promised payment to every single retiree in America for the next 37 years. The system certainly faces some long-term challenges, but it is strong. We need to figure out how to make Social Security stronger, not how to dismantle it." Durbin said the President's proposal would:
Cut benefits by one-third or more, even for those who choose not to risk their money in a privatized account. Add up to $5 trillion to the national debt, largely financed by foreign countries like China and Japan.
For the average wage earner born in 1970, the President's proposal would result in a nearly $5,000 per year cut in Social Security benefits. That figure is the difference between the $17,700 in guaranteed benefits the worker would receive under the current Social Security system and the $12,841 the same worker likely would receive under the President's proposal. The latter figure assumes that the money set aside in the worker's private retirement account would grow at an average annual rate of 3 percent - after management fees and other costs are taken out.
"Even the White House admits that private accounts do nothing to fix Social Security's long-term solvency challenge. Private accounts would make Social Security weaker, not stronger," Durbin said. "Instead of making every payment for the next 37 years, the President's plan would move up the day when Social Security would begin to run a deficit. Privatizing Social Security is clearly moving in the wrong direction." "Social Security has cut the poverty rate among retired Americans from 50 percent to only 10 percent today. We need to make sure that people get what they earned so the guaranteed Social Security benefit remains a foundation for a secure retirement," Durbin said. Social Security is more than just a retirement program; 37 percent of Social Security benefits go to younger workers who have been disabled and minor children of workers who died before they collected Social Security. "Privatization assumers that you build up money in a private account for decades," Durbin said. "Private accounts don't work at all for workers who are disabled or children who lose a parent; it leaves these Americans out in the cold." With private retirement accounts, Enron-style scandals - or just the uncertainties of the stock market -- could deny many Americans enough income to retire at all, Durbin said. "An increasing number of people would end up just working until they die." Durbin's meeting in Springfield followed a two-day, four-city "Fix It, Don't Nix It" tour across the United States with Senate Democratic Leader Harry Reid (D-NV) and Senator Byron Dorgan (D-ND). The Senators held a series of Social Security forums in New York, Philadelphia, Phoenix and Las Vegas, talking with local citizens about the Social Security debate and how Democrats want to fix the program.
http://durbin.senate.gov/releases.cfm