Boston, MA
In naming a commission to privatize Social Security, President Bush continues his practice of shutting out the voice of working families from his administration's policy deliberations. Slavish adherence to the corporate agenda of his political backers has become the trademark of the Bush presidency.
Americans want a president who has the right priorities for working families and represents a fair balance between corporations and workers. By appointing a commission to privatize the source of most retirement income for average-wage families, Bush fails, once again, to measure up to this standard.
The composition of the President's commission makes clear that the President has no intention of talking to or hearing from the overwhelming majority of people who depend on Social Security in retirement and for protection against the loss of income from disability or the death of a wage earner. Instead, the President is appointing a commission stacked with members committed to replacing Social Security's benefits with privatized individual accounts, regardless of their costs to working families.
Replacing Social Security benefits with privatized individual accounts, as President Bush has proposed, involves huge changeover costs. An individual account plan funded with just two percentage points of the payroll contribution tax would take more than $1 trillion away from the Social Security trust funds in just the first decade. All of that money is already committed to paying benefits for today's and tomorrow's retirees, disabled workers and surviving family members.
Taking money away from Social Security only worsens the system's financing and without additional resources will require deep cuts in benefits. According to a recent study by the non-partisan Century Foundation, the Bush plan would likely require Social Security's guaranteed benefits to be cut by 41 percent for the average worker, even under the best circumstances. The individual accounts would make up only a fraction of the shortfall. Assuming benefit cuts were phased in, total retirement benefits would fall by 20 percent for a single, average-wage earner. Cuts would be even deeper for many married couples and low-income earners and for workers who got below-average investment returns.
The President has also indicated that he is open to raising the retirement age even further-perhaps to age 70 or higher-as a way of paying for his costly plan. This is the cruelest benefit cut of all. If he decides to cover half the cost of his privatization proposal with a retirement age increase, President Bush will have to raise the retirement age to over 70 for workers 35 and younger today. Covering the entire cost with a retirement age increase means that today's young workers will have to work until 73 to get full benefits. Raising the retirement age is particularly unfair to people who spend their work lives doing physically demanding jobs.
This plan poses an enormous threat to the retirement security of working families. Nearly two-thirds of retirees count on Social Security for half or more of their income today, and as companies continue to cut back on real pensions, family retirement income is put even more at risk. Working families cannot afford the kind of cuts in benefits and family protections that President Bush's plan will require.