Miami, FL
Throughout the history of Social Security, the American labor movement has been steadfast in its support of this most vital program. As the program has developed, providing broader and deeper protections to working families, that support has only grown stronger. Today, the AFL-CIO reaffirms its commitment to Social Security, and pledges to fight for a strengthened system for the next century.
Social Security is America's most comprehensive and important family protection system. Through Social Security, all Americans work together to protect each other against risks that would be devastating if faced individually. The system is crucial not only to the economic security of the 44 million retired and disabled workers and their dependent and surviving family members who receive monthly benefit checks, but also to the more than 130 million workers who are insured in case of a severe disability, and the tens of millions of children who are protected in the event of the death of a family wage earner.
Today, Social Security faces serious but modest long-run financial challenges. According to the Social Security actuaries, the system will be able to pay 100 percent of benefits until 2032, and after that time, even if no changes are made, tax revenue to the system will be sufficient to cover roughly 72 percent of expected benefits. Given Social Security's critical role in providing family economic security, it is important that we act soon to assure Americans that Social Security will continue to be there for them. It is equally important, however, that we neither jeopardize the system's capacity to provide workers with a guaranteed foundation of retirement security, nor undermine its family protections.
Early last year, President Clinton called on Americans to participate in a national discussion about the future of Social Security. The AFL-CIO and its affiliate unions have devoted significant resources and substantial energy to considering the appropriate direction for Social Security's future, and to ensuring that working families are informed and active participants in this debate.
One of the most important outcomes of this national discussion is that many unwise and reckless ideas have been brought into the light of day. Foremost among these ideas are proposals to replace Social Security's guaranteed, defined benefits with risky individual investment accounts. Today, Social Security's protections for working families--guaranteed, lifelong benefits, full adjustments to guard against cost-of-living increases, increased benefits for families, greater income replacement for low-income workers, as well as disability and survivor benefits--are the bricks and mortar of economic security in the United States. Displacing any part of this system to create costly individual investment accounts would fundamentally undermine the foundation that Social Security provides. So, too, would replacing any part of the remarkably efficient and effective Social Security Administration with private management.
Substituting individual investment accounts for today's system also would force Americans, both young and old, to pay a high price for the transition to a privatized system. We adamantly oppose these huge, misguided cuts in Social Security's guaranteed benefits that are part and parcel of individual account proposals. America's working families cannot afford increases in the retirement age to 70 and higher, sharp reductions in inflation protections, or other deep cuts in guaranteed benefits.
As we urged, President Clinton has rejected replacing Social Security benefits with individual accounts. We strongly agree with the President that Social Security must be kept a "rock-solid guarantee."
As a first step toward strengthening Social Security for the next century, President Clinton has called on Congress to use almost two-thirds of anticipated unified budget surpluses for Social Security. We agree. Appropriating 62 percent of unified budget surpluses to Social Security over the next 15 years will ensure that 100 percent of the system's benefits can be paid for an additional 17 years. The President has also proposed using an additional 15 percent of unified budget surpluses over the next 15 years to extend the solvency of Medicare, a program that is vital to both the health and income security of elderly and disabled Americans, and that will face its own financial challenges within the next decade. Taking each of these steps would assure that the benefits of our strong economy are returned to the people whose hard work made it possible; that's exactly as it should be.
Though in recent years the AFL-CIO has focused its energies on fighting cuts in Social Security, we have never lost sight of the need to improve it. We support the President's commitment to improving benefits for elderly widows. All too often, American women spend their retirement years in dire poverty after lifetimes of hard work both in and out of the home. If we are to have real Social Security reform, it must include real improvements for older women.
The President's call to revisit the Social Security earnings limit also deserves consideration. While the earnings limit serves an important role--distributing retirement income to individuals when they are most in need of Social Security's support--it can also act as a disincentive to those older Americans who are able and willing to continue working.
The President has also pledged to seek a consensus on additional steps to address the remaining Social Security shortfall. We believe that a fair and responsible second step would be to increase the cap on earnings subject to the Social Security payroll contribution tax. This approach would act as a progressive counterbalance to the growing wage inequality that has plagued working families for the past two decades and that the Social Security actuaries predict will continue well into the future. Raising the contribution cap can be done in a way that entirely eliminates the shortfall that would still remain if the President's proposal to devote
62 percent of the unified budget surplus is adopted--without cutting any family's benefits or raising taxes on anyone except the most highly paid workers.
Clearly, the fight to strengthen Social Security is not over. The President has offered an important first step, but Social Security's future is still threatened by proposals to replace the system with individual investment accounts, raise the retirement age to 70 and higher, cut inflation protections, and slash guaranteed benefits. The AFL-CIO and its affiliate unions will fight with renewed energy for a stronger and more secure Social Security system for the 21st Century.