Congresswoman Marcy Kaptur, on Social Security

We can strengthen Social Security without slashing benefits that Americans have earned. Private accounts make Social Security'schallenge worse, force massive benefit cuts and increase the national debt. Once President Bush stops insisting on privatization, we can work together to keep the promise of Social Security.

Social Security is meant to be a guaranteed insurance plan, not an investment gamble.
The President claims that the country will save money because of his privatization scheme. What he does not mention, however, is that the "private accounts" portion of his plan requires trillions in borrowing from foreign countries -- leading to higher taxes in the future. Borrowing $1.4 trillion in the first 10 years that the accounts are up and running (2009-2018) and $3.5 trillion in the next decade they are in operation will further increase our escalating debt. President Bush has already increased the national debt to the point that a family of four's share of annual interest costs is already thousands of dollars a year. This debt will only increase under his Social Security privatization plan.
It is a cut in benefits - not privatization - that is the source of any savings in the plan. This is because, in addition to the private account component, there is a second probable component to the proposal that would cut guaranteed Social Security benefits over the next 75 years by $3.6 trillion - almost the identical figure to the current shortfall. A 20-year old who enters the workforce this year would lose $152,000 in Social Security benefits under the Bush plan.
While private accounts are voluntary, the benefit cuts would apply to all beneficiaries, whether or not they had chosen to have a private account, and these private accounts won't even make up for the 46 percent cut in benefits that Bush has proposed. This is because the plan would also take back 80 cents of every dollars that an individual has deposited in his or her private account.
Social Security is not in crisis and is not going bankrupt. Payroll taxes, in combination with the Trust Fund, are sufficient to pay 100 percent of promised benefits through at least 2042. Even after 2042, Social Security will not be "bankrupt" and unable to pay any benefits at all, as some imly. Even if Congress makes no changes to Social Security at all, the program will still be able to pay at least 75 percent of promised benefits after 2042 because of the payroll taxes being paid in by future workers.
The stock market, in which any "private accounts" would be invested, has not consistently yielded higher returns than the Social Security program. Social Security is not an investment program; it's an insurance program. Unlike investments, Social Security provides a guaranteed benefit, adjusted for inflation, for the life of the beneficiary.

* While the market has had a general trend, there were fifteen years in the past century in which the value of the stock market fell by more than 40 percent over the preceding decade. The General Accounting Office has reported that stock returns were lower than Social Security's annual yield 35 percent of the time from 1950-96.

* Due to stock market volatility, a worker who contributed to an individual account for 41 years prior to retiring in 2001 would have received a monthly check 40 percent smaller than a similar worker who retired two years earlier in 1999. Social Security doesn't have that variability.

Citizens have been paying into Social Security from the time of its creation, having been promised that they would get the benefits for which they were paying their dues. We must not pull the rug out from under them now.
Before Social Security, more than half of seniors lived in poverty, but today fewer than 11 percent fall below the poverty line. Today, the 3 major elements of Social Security help even more people than ever before, 47 million in total:

*Old age: Average seniors (those with a median income of $19,000 per year) rely on Social Security for two-thirds of their income. It's the only source of income for nearly 20 percent of retirees.

*Disability: Social Security provides the equivalent of a $353,000 disability insurance policy, replacing around 65 percent of earnings in the event of a worker's disability. Workers have a 3 in 10 chance of becoming disabled during their life.

*Death: Social Security provides the equivalent of a $403,000 life insurance policy, replacing up to 80 percent of earnings. A 20-year-old has a 1 in 5 chance of dying before reaching retirement.

Prior to 1984, members of Congress were covered undera separate program, the Civil Service Retirement System. However, the law was changed in 1983. Since January 1984, Members of Congress have been retired to pay into Social Security, and have been eligible to receive benefits under the same rules that apply to all other workers. The Thrift Savings Plan, similar to a 401(k) in the private sector, is a voluntary contribution option available to all federal employees and, like a pension in the private sector, is in addition to the FICA contribution.