Legislation & Politics

AFSCME's Position – Fighting Social Security Privatization

Background

For 70 years, Social Security has worked for workers providing guaranteed benefits in retirement, and to workers and their families in the event that they become disabled or die before retirement. Workers earn their Social Security benefits by paying into the Social Security Trust Fund during their working lives. Currently, over 175 million workers contribute to Social Security and 47 million receive benefits. Benefits are guaranteed by the full faith and credit of the federal government. Benefits are fully protected against inflation and as a result, the buying power of a Social Security check never diminishes. And benefits last a lifetime: paid every single month, so workers cannot outlive them.

President Bush claims that the Social Security program is in crisis. His way of solving this so-called crisis is to radically transform the current program of guaranteed benefits into a program where workers invest in the stock market and assume the risks that come with it. President Bush proposes to privatize Social Security and permit workers to be able to divert about a third of their payroll contributions to private accounts that would be invested in the stock market. Social Security privatization is a radical plan that hurts the economy and undermines the system's vital worker protections. Under President Bush's plan, benefits would have to be slashed for all workers, even those who do not choose to invest in private accounts. Additionally, Bush's privatization plan would rack up trillions of dollars in additional government debt over the next 60 years that would have to be paid back by future generations of workers.

The reality is that the Social Security program is not in a crisis. Even if no changes are made to strengthen the program, it can continue to pay 100 percent of all guaranteed benefits until sometime in the middle of this century — 40 to 50 years from now. Using current projections, Social Security would only be able to pay about 75 percent of currently mandated benefits after that unless changes are made to strengthen the program. The resulting shortfall is a challenge that can be solved and does not require a radical overhaul, such as privatization. Privatization turns a good deal into a bad deal.

Summary of legislation   

President Bush and his congressional allies tried but failed to ram a Social Security privatization bill through the Congress last year. The plan (H.R. 3304) would have taken funds from the Social Security trust fund to pay for private accounts. It does not matter if you call the funds "payroll taxes" or "Social Security surplus"; what matters is that guaranteed benefits are cut and replaced by private accounts. That is privatization pure and simple. Diverting payroll taxes away from the Social Security trust fund and into personal/private/individual accounts — no matter what they call it — is privatization. Worse yet, this privatization plan would add more than $1 trillion to the national debt in the first 10 years and more than $3.5 trillion by 2050. Proponents admit this bill is the first step on the way to full privatization and the dismantling of Social Security. Their privatization plan actually pushes the insolvency date three years sooner.

Having failed to sell privatization to the American people in 2001, 2002, 2003, 2004, 2005 and 2006, President Bush and his congressional supporters have announced that they will try again in 2007. In remarks to the press two weeks ago, President Bush reiterated his commitment to continue pressing forward with changes to Social Security every year until he leaves office. 

AFSCME position

AFSCME opposes any bill that enacts private accounts and cuts any guaranteed benefits. Any bill that privatizes Social Security is a bad deal for working Americans. Social Security must be strengthened to meet future obligations, but we need to take the time to do it right.

What you can do

Contact your Senators and Representative and urge them to oppose privatizing Social Security pure and simple. Privatizing Social Security by any name is a bad and risky deal for workers and should be rejected. Let us help, not hurt, working families by saying "No" to Social Security Privatization.

Department of Legislation
October 2006   

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