Social Security--Exerpts from a Special Report from the National Committee to Preserve Social Security and Medicare

Franklin D. Roosevelt Signing the Social Security Act

Social Security Facts

Here are some facts from : "Special Report: SOCIAL SECURITY-- Its future and yours" from the National Committee to Preserve Social Security and Medicare

Fact #1...According to Social Security's own actuaries, Social Security is running a healthy $1.7 trillion surplus--a surplus projected to grow (not shrink) to almost $3.7 trillion by 2014.

Fact #2... The current projections show Social Security able to pay full benefits for another three decades and then some.

Fact #3.... Beyond that, there are reasonable, solid, relatively modest adjustments that would ensure the viability of Social Security for many years to come...So it follows that...

RADICAL CHANGES ARE NOT NECESSARY TO "SAVE" SOCIAL SECURITY.

However, many in Washington are pushing for privatization, saying this approach is essential to prepare the program for the onslaught of retiring baby boomers.

Fact #4...Far from "saving" Social Security, privatization that diverts Social Security money to private, individual accounts drains Social Security's surplus--thus requiring cuts in guaranteed benefits for future retirees.

Fact #5...Social Security were privatized, taxes would have to be increased significantly; massive new government debt incurred; guaranteed benefits dramatically scaled back; or some combination of all the above.

TRANSITION COSTS WOULD BE SIGNIFICANT. Social Security is a pay-as-you-go program, with current workers' contributions being paid out to current beneficiaries. The moment payroll taxes were diverted away from Social Security and into privat accounts, the program would suffer a reduction in funds that would grow larger every year. Financing that gap is counted among the "transition costs."

Fact #6....The transition cost for proposed partial privatization over the first ten years alone has been estimated at $2 trillion or more.

Fact #7...A recent study estimated that Wall Street fees would consume an excessive amount of the average worker's beneficiaries, especially when...

SOCIAL SECURITY IS ALREADY THE BETTER INVESTMENT...President Franklin D. Roosevelt created the program to provide retirees with guaranteed income--which was later amended to include increases for inflation. But privatization would dilute, undermine, and in some cases destroy that promise.

Fact #8...Gambling your retirement security on the stock market would be incredibly risky (e.g., NASDAQ lost 75% of its value between 2001 and 2003.)

Fact #9...those nearing retirement could be further hurt by a transition that leaves them little time to accrue substantial private accounts, but still imposes reductions in guaranteed benefits.

Fact #10...Social Security has a higher average return than any mix of financial assets in private accounts when adjusted for risk.

Fact #11 Current law requires that every penny in the Social Security Trust Funds will be available when needed by future beneficiaries. And furthermore...

IF YOU CARE ABOUT THE FUTURE OF SOCIAL SECURITY, YOU BELONG IN THIS DEBATE...It probably seems like the politicians, Wall Street, and the policy experts have all the answers and all of the clout when it comes to deciding what is best for Social Security. But do they?

FACT #12...While Congress may hold the levers of power concerning Social Security, it's you who they listen to most.

I learned this firsthand during my 17 years in Congress. Every time there was a major proposal on the table that could in any way jeopardize Social Security or Medicare benefits, tha most informed, most involved, and most vocal opponents were seniors.

But I quickly learned, these weren't just individuals acting alone. It was a highly organized, nationwide grassroots effort. I and many of my fellow members of Congress came to respect the name and logo apearning on millions of letters, postcards,and petitions flooding our offices: National Committee to Preserve Social Security and Medicare.

Fact #13...You've got even more clout with us.

Fact #14...Launched in 1982 by Franklin and Eleanor Roosevelt's eldest son, James Roosevelt, the National Committee is 100% independent.

Fact #15...We don't sell insurance. We don't accept "donations" from investment firms or drug companies. We accept no money from the federal government. Wer are totally, solely supported by our members,like you who have steppted forward to support our cause.

Fact #16...We've taken on the recurring challenges--like protecting COLAs and fighting unfair budget cuts--and the major , history-making battles against restructuring America's social insurance programs.

[Needed more than ever in this era of globalization and free trade.]

Fact #17...The National Committee is now in its 17th year of staving off attempts to privatize Social Security through well-timed, well-organized media campaigns, testimony on Capitol Hill, and the grassroots support of millions of members and supporters.

Barbara B. Kennelly, President and CEO

National Committee to Preserve

Social Security and Medicare.

Get involved!

Ford Hunger March

Depression era photo by Dorthea Lange

Ford Rouge Tool & Die Shop

The History and Background of Social Security

The debate on changing Social Security from its original social insurance concept to one of individual savings and investment accounts has focused on the numbers and how best to assure that funding is sufficient for future benefits.

Equally important is an understanding and respect for the conditions that led to the adoption of Social Security in 1935 and recognition that workers still face great insecurities as a result of globalization, free trade and rapid economic changes in this country. Examining the the forces that gave rise to Social Security and other New Deal legislation provides perspective to the debate over our country's needs today.

During the early 20th century, the United States evolved quickly from an agrarian and small-business economy, in which people lived independently on farms and in small towns, to an urban society in which workers in industrial centers such as Detroit, Cleveland and Pittsburgh found themselves dependent for their livelihood on the state of the economy, on the viability of their industry and employer, and on their own good health.

Detroit's population grew from 285,000 in 1900 to 1.6 million in 1935 as workers flocked from farms in the South and Midwest to work for big wages on Ford's assembly lines, but, far from their farms and relatives, they faced new insecurities.

For example, after attracting thousands of workers to Detroit, Henry Ford shut down his Rouge plant for six months in 1927 to change from the Model T to the Model A and had massive layoffs again in 1931, dumping 60,000 workers onto the relief rolls without income to sustain them, far from their farms where they could have grown their own food.

New Deal measures such as the Wagner Act, Social Security, unemployment and workers compensation, provided security in the event of layoff, injury on the job and arbitrary firing--when, as Walter Reuther put it they were "too old to work and too young to die."

Also forgotten in the debate is the role played by New Deal programs in the preservation of our democratic, free enterprise system.

When Franklin D. Roosevelt was inaugurated, unemployment in the United States was 30 percent, and many people were embracing socialism or communism as a model for our country. On March 7, 1930, John Schmies, Communist Party candidate for mayor of Detroit, led a Ford hunger march from Detroit to Dearborn. After the Wagner Act was passed and the steel, auto, electrical and automobile industries were quickly unionized, union leaders such as Walter Reuther cleaned the communists out of the labor movement and proceeded pragmatically to adress the needs of its members.

The result was the construction of a remarkable edifice by employers and union leaders that included paid holidays and vacations, health insurance and pensions, high-paid jobs and a private system of industrial jurisprudence that provided due process in the workplace. These measures provided answers universal questions such as : What happens to me and my family if I'm injured or get sick and can't work? If I'm laid off? When I'm too old to work? And what protection do I have if I'm fired arbitrarily?

Now, thanks to global competition, the foundation of our industrial edifice is cracking. Detroit's population has fallen from 1.6 million in 1935 to 899,000 today, and the city's and state's finances are in dire straits. Less than 10 percent of the private workforce in the United States is unionized. The gap between the rich and the poor and middle class has grown much wider in recent years due to structural changes in the economy, weakened bargaining power of unions, and tax cuts favoring the rich. More and more Americans get low-wage jobs with few benefits through temp agencies or with low wage employers like Wal-Mart or MacDonald's. The Big Tree U.S. car makers are teetering on the edge of bankruptch and. Delphi, the largest motor vehicle parts maker, has been in bankruptcy for the past two years. Auto industry pensions are under-funded as is the federal Pension Benefit Guaranty Corporation, and health care benefits aren't funded at all but paid out-of-pocket to employees and retirees only so long as the companies are able to do so.

In the golden '50s and '60s , retirement security was viewed by the companies and the unions as based on a three-legged stool: Social Security; a non-contributory defined benefit pension plan: and personal savings.

With our manufacturing industry under siege, defined benefit pension plans underfunded and disappearing, and personal savings declining, now is hardly the time to weaken the Social Security leg of the retirement security stool by subjecting it to the risks of private securities markets operated by investment bankers and mutual funds where serious conflicts of interest and illegal activities have been discovered in the past two or three years.

Private savings and investment accounts, in addition to SocialSecurity and employer pensions, in addition to increasing the national savings rate, are important components of retirment security. But nothing in the Bush administration's privatization plan would increase savings or provide greater security. Greater participation in 401(k) plans and IRAs by low income workers should be encouraged by requiring immediate eligibility, automatic enrollment and better tax incentives for participation.

President George Bush's proposed "reform" of Social Security appears to spring from libertarian think tanks such as the Cato Institute and the American Economic Institute and from Wall Street where firms have been salivating to get their hands on Social Security tax money. These proposals fail to recognize that Social Security, as originally conceived, has served the nation well and is as needed now as it was in 1935.

[Adapted from an op-ed by Ralph Deeds that appeared in the Detroit Free Press, February 23, 2005]

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McCain Supports Privatization of Social Security

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6 comments

raymondphilippe profile image

raymondphilippe 9 years ago from The Netherlands

Social security & Medicare are hot items in Holland too.


Ralph Deeds profile image

Ralph Deeds 9 years ago Author

I didn't know that. What are the issues? Funding? Retirement age? Benefit levels?


wiseoldaccountant profile image

wiseoldaccountant 5 years ago from Buffalo and Orchard Park NY

Good article!

Things have not changed much in 4 years. Too bad Perry did not read you article. Please take a look at:

http://hubpages.com/money/Social-Security-Will-Be-...


adam 4 years ago

The Walker Evans image is actually Dorethea Lange


Ralph Deeds profile image

Ralph Deeds 4 years ago Author

Thanks for the correction!


Ralph Deeds profile image

Ralph Deeds 3 years ago Author

Social Security benefits should be increased, not cut!!

11-22-13NYTimesOP-ED "Expanding Social Security" by Paul Krugman

Expanding Social Security - NYTimes.com

Increases in the program won't happen soon. But it's a good sign that the idea finally is on the table.

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