Unequal Remedies for Social Security
By William Lucy
There are few things in this world you can still count on. Fortunately for Americans, one of them is Social Security.
This federal program provides a crucial safety net unlike any other. Because it has raised — or kept — countless older Americans above poverty, Social Security must be considered one of the foremost examples of successful social policy in the 20th century.
Originally created during the New Deal era to provide for indigent widows, the program has now grown to cover a much wider range of retired and disabled workers and their surviors. For more than 60 years, Social Security has paid benefits to millions of Americans, never missing a monthly payout.
As we look to the future, however, we know that the aging of the American people will strain the program and the Trust Fund that provides its income stream. The next Presidential administration must make decisions that will determine the course of Social Security in the 21st century.
Al Gore wants to use the current healthy budget surplus — created by the wise fiscal policies of the last seven years — to shore up Social Security and keep it solvent for generations to come. This move would extend the program through at least 2050, without any benefit cuts, while paying off the national debt in full by 2013.
George W. Bush, however, prefers to stake our futures on a risky scheme to partially privatize Social Security, making it vulnerable to the roller-coaster behavior of the stock market.
His plan would divert a portion of payroll taxes from Social Security to individual investment accounts, draining nearly $1 trillion from the Trust Fund over 10 years. This loss of revenue would require major changes, such as increasing Social Security payroll taxes, raising the retirement age to 70 or higher, and cutting benefits up to 40 percent.
Bush says that investments in individual accounts will more than make up for any benefit cuts that may be necessary. The truth, how-ever, is that private investments might not offset the loss in benefits, so those caught in the privatization scheme could wind up with far less than they'd receive through traditional Social Security.
Anyone who has followed the stock market knows that there is no guarantee on investments. Bush's gamble would therefore fundamentally alter Social Security, which was established to be a guaranteed source of retirement income.
The only ones who are guaranteed to come out winners in George W. Bush's plan are the private firms that will manage the individual accounts and charge hefty fees for their services.
It is no surprise that representatives of large financial institutions (many of whom happen to be longtime Bush friends) are actively lobbying for privatization of Social Security.
Those with the most to lose in the push for privatization are women and minorities. Both depend on Social Security more heavily than white males for various reasons.
For women, both biology and societal factors enter the equation. Women tend to live longer than men and typically spend years out of the paid workforce taking care of children or elderly relatives. They are also generally paid less than men during their years working outside the home.
For these reasons, Social Security has been a true lifesaver for women. Half the women currently age 65 and older would be poor if not for Social Security. And for 25 percent of elderly women who live alone, it is the only source of income.
Like women, minorities depend disproportionately on Social Security because they are less likely to be covered by pensions or have adequate personal savings.
In fact, 75 percent of older African-American and Latino households rely on Social Security for half or more of their retirement income. A full third of those households rely on Social Security for all income.
Thus, anything — like Bush's scheme — that jeopardizes the reliable, steady benefit of Social Security would have a disproportionate impact on those who most need the program: women and minorities.
Economists frequently describe adequate retirement savings as a three-legged stool: pension savings, personal savings and Social Security. Proportionally fewer Americans than ever before have access to a traditional pension — one leg of the retirement savings anal-ogy. Those who earn less, including women and minorities, are generally able to save less — so there goes another leg.
Without Social Security, America's women and minorities won't have a leg to stand on.
