Issue Position: Social Security
Social Security is one of the most successful domestic programs in the nation's history, preventing millions of Americans from slipping below the poverty line. Unlike both market-dependent 401(k) plans and the increasingly unstable pension plans, Social Security provides a guaranteed monthly check to retirees and disabled Americans. Privatizing Social Security would remove this guarantee and leave the program vulnerable to fluctuations in the stock market. Social Security privatization is a gamble the country cannot afford to take if it wants to protect the retirement security and financial well-being of future generations.
Any corrections made to the program should reinforce Social Security with additional financing, not weaken it with proposals that cut benefits and increase the mounting national debt, which is exactly what President Bush's plan would do. Without making fundamental changes to the program that would leave seniors at the mercy of the stock market, Social Security can be strengthened to ensure a guaranteed, inflation-adjusted, lifetime benefit for all generations.
Forty-seven million Americans receive Social Security benefits. Over one million citizens in Massachusetts rely on Social Security.
Nearly half of all Massachusetts seniors would be living in poverty without their monthly check from Social Security. Social Security reduces the poverty rate among seniors in the U.S. from 50 percent to about ten percent.
Social Security is the primary source of income for two-thirds of seniors, and the only source of income for one-fifth of seniors.
A Social Security Trustees report released in early 2005 stated that the program had sufficient revenue to pay full benefits until 2041. The Congressional Budget Office projected sufficient revenue to pay full benefits through 2052. These figures dispute President Bush's claim that Social Security is facing a serious financial crisis.
The Republican privatization plan would cut future benefits for some workers by one-third or more. Later generations would suffer cuts of 50 percent or more.
The Republican plan would increase the debt by $4.9 trillion over 20 years.
Facts vs. Fiction
"As we fix Social Security, we also have the responsibility to make the system a better deal for younger workers. And the best way to reach that goal is through voluntary personal retirement accounts." Source: White House, 02/01/2005
"Analysis of the plan so far does not prove the accounts would be a better deal for anyone not working on Wall Street. Workers who opt for the private accounts would recover forfeited benefits through their accounts only if their investments realized a return equal to or greater than the 3 percent earned by Treasury bonds currently held by the Social Security system." But CBO factors out stock market risks to assume a 3.3 percent rate of return. With 0.3 percent subtracted for expected administrative costs on the account, the full amount in a worker's account would be reduced dollar for dollar from his Social Security checks, for a net gain of zero." Source: Washington Post, 02/04/2005
"You'll be able to pass along the money that accumulates in your personal account, if you wish, to your children or grandchildren." Source: White House Web site, 02/02/2005
"Most lower-income workers will be required to purchase government lifetime annuities, financial instruments that provide a guaranteed monthly payment for life but that expire at death. Money in these annuities cannot be passed on to heirs. - Source: NY Times, 2/3/05, 02/03/2005
"We must pass reforms that solve the financial problems of Social Security once and for all." Source: White House Web, 02/02/2005
"A Bush aide, briefing reporters on the condition of anonymity [said] that the individual accounts would do nothing to solve the system's long-term financial problems." The long-term gap in revenue would have to be closed through benefit cuts that have yet to be detailed." - LA Times, 2/3/05; Washington Post, 2/5/05" Source: LA Times, 2/3/05; Washington Post, 2/5/05, 02/05/2005
"In the year 2018, for the first time ever, Social Security will pay out more in benefits than the government collects in payroll taxes." Source: Source: White House Web site,
"In 14 of the past 47 years, including 1975 to 1983, Social Security paid out more in benefits than the government collected in payroll." - MSNBC, 1/14/05 Under Bush's plan, expenditures will begin to exceed revenues even earlier, in 2012. - NY Times, 2/4/05"
"Under the current system, today's 30-year old worker will face a 27% benefit cut when he or she reaches normal retirement age." Source: GOP Guide to Social Security Reform, 02/01/2005
"According to the Congressional Budget Office, younger workers would receive better benefits from Social Security as it exists now, even if nothing changes, than from President Bush's private accounts plan. - EPI, 2/05" Source: EPI, 02/01/2005
"Members of Congress could take some lessons from Chile, particularly when it comes to how to run our pension plans. [Source: White House Web site] " Source: White House Website, 04/16/2005
"Chile's Retirees Find Shortfall in Private Plan. - NY Times Headline, 1/27/05" Source: The New York Times, 01/27/2005