Social Security is a safety net for retirees, disabled workers, and survivors, and it is the only system that provides guaranteed benefits to workers. When a worker retires or becomes disabled, a person is widowed, or a child loses a parent, he or she receives guaranteed, life-long Social Security benefits that are protected against inflation. Social Security has never failed to pay a benefit on time or in full. No other program offers this type of security.
Without Social Security, more than 50 percent of American seniors would live in poverty; with it, 90 percent of seniors are kept out of poverty. Social Security provides the majority of income for 6 out of 10 seniors, and it is the only source of income for 20 percent of elderly Americans. It provides life and disability insurance, and 30 percent of beneficiaries are either disabled or survivors.
No Immediate Crisis
President Bush is scaring the American public into believing that there is an immediate crisis in Social Security. There is not. According to the Social Security trustees, Social Security can pay all benefits through 2042 and 70 percent of benefits after that. According to the nonpartisan Congressional Budget Office (CBO), Social Security can pay all benefits until 2052 and 80 percent of benefits after that. Social Security does face long-term challenges that need to be addressed, and these can be fixed with modest changes to the system.
The president has proposed a privatization plan for Social Security that would divert up to one-third of a worker's Social Security payroll taxes to a private account, leaving the rest in the Social Security Trust Fund. The president claims that workers would have a choice to stay in traditional Social Security or opt for a private account. But whichever they choose, their benefits will be cut, and once a worker opts into the private accounts, he or she can never opt out.
President Bush will replace a guaranteed benefit with a guaranteed benefit cut, leaving benefits in worse shape than if we did nothing at all to the system. Privatization will not fix the Social Security shortfall. It will not improve or address Social Security's finances, and instead beneficiaries will see cuts of up to 46 percent in their benefits.
The government would need to borrow nearly $5 trillion over the first 20 years of the privatized program, with trillions more needed in future years. Our national debt is already at record levels and President Bush wants to add more to it. This will mean higher long-term interest rates for consumers, a greater share of the federal budget devoted to debt payments, and the inability of the government to provide needed services.
The president also tells workers that if they choose private accounts, the money in that account is theirs. This is misleading. His plan will dictate where workers can invest, when workers can take their money out (only at retirement), and it will cut workers' Social Security benefits to offset the money they diverted to their accounts from Social Security.
Social Security should never involve risk. Privatization would take this country's safest and most successful insurance program and put it at the mercy of the stock market.