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Soc Sec Coalition Response to Specific Questions

Soc Sec Coalition Response to Specific Questions

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Published by Spandan Chakrabarti

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Published by: Spandan Chakrabarti on Oct 23, 2010
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Strengthen Social Security Coalition Co-Chairs'Comments on Social Securityin response to questions by:Spandan Chakrabarti, PublisherThe People's View. http://www.thepeoplesview.net
We regret not getting back to you sooner, Pleased you are in agreement with the principles of the Strengthen Social Security Campaign(www.strengthensocialsecurity.org). And we share with you the sense of importance that it “mustremain a public program and a generational social contract.”We are pleased to share with you why the organization we co-direct, Social Security Works(www.socialsecurity-works.org) and the Strengthen Social Security Campaign are so concerned aboutthe National Commission on Fiscal Responsibility and Reform, believing that commission poses amajor threat to Social Security protections for current and future generations. Beyond taking the position that the projected Social Security shortfall should be addressed throughnormal legislative procedures and with revenues (not benefit cuts), the coalition has not, as yet, taken a position on specific proposals although its steering committee is exploring options. So, in respondingto your specific questions, we do so as individuals who as academics and analysts have written widelyabout Social Security and related pension, retirement and population aging issues and as people whohave been staff to several commissions, including the 1982 National Commission on Social SecurityReform (a.k.a., the “Greenspan Commission”) – one of us as the top advisor to Alan Greenspan and theother as advisor to the five members of the Commission appointed by Speaker Thomas P. O’Neill.As background you should also know that the coalition of over 225 national and state organizations iscommitted to strengthening Social Security in a manner that does not undermine it vital protections for today's and tomorrow's retirees, working persons, persons with disabilities and other family memberssuch as the 4.4 million children who today receive Social Security benefits every month, primarily asdependents of a deceased or disabled worker. It consists of a broad range of organizations whocollectively represent over 50 million members -- including the AFL-CIO, SEIU, AFSCME, NEA,MoeOn.org, National Organization of Women, Task force of Older Women's Economic Security TasForce of the National Council of Older Women, AAUW, NAACP, Alliance of Retired Americans, National Committee to Preserve Social Security and Medicare, National Hispanic Council on Aging,American Association of Persons with Disabilities, Voices for America's Children and CommonCause.
Why we think the Fiscal Commission poses a major threat to Social Security Protections
 As you know, President Obama established the National Commission on Fiscal Responsibility andReform by executive order earlier this year in response to members of Congress concerned about thegrowing federal debt. While many of the organizations in our campaign believe the federal debt is aserious problem that should be addressed, we are united in the belief that Social Security should
not 
beconsidered by the commission because it has not contributed one dime to the federal debt. By lawSocial Security cannot borrow or go into debt. In fact, Social Security has a $2.6 trillion surplus today,which is projected to be $4.2 trillion by 2025.
 
 · Social Security pays very modest benefits less than $13,000 a year on average to morethan 53 million Americans. This is less than the minimum wage. While most are receivingretirement benefits, 1 out of 4 beneficiaries is a severely disabled worker, a surviving spouse caringfor dependent children, or a dependent child. Nearly 2 out of 3 seniors rely on Social Security for half or more of their income, and it lifts 20 million Americans out of poverty. And, though often notrecognized, it is the nation’s Social Security is also nation’s most important children’s program,insuring nearly every child against loss of income if a parent experiences severe work disability or dies. It does all this with administrative costs of less than 1%. In short, Social Security is verysuccessful and strongly supported by the American people. But the Fiscal Commission puts Social Security at considerable risk. Press reports indicate that it isseriously considering a number of major benefit cuts, described in this fact sheet. The laser-like focuson Social Security is not surprising since a majority of the commission members have openlyadvocated cuts and/or privatization in the past. Before all commission members were appointed, bothco-chairs went on record saying that in the words of co-chair Erskine Bowles, they were going to “messwith Social Security.” More recently, co-chair Alan Simpson referred to Social Security as a “Milk Cow with 310 million “tits.” These are hardly impartial positions for co-chairs of a major nationalcommission whose decisions will impact the lives of every American.Moreover, from the beginning of the Commission process, we have heard that the one area beingsingled out for change is Social Security even though it does not and cannot contribute to the federaldeficit. We have also heard that this commission was focused primarily on addressing the projectedlong-term financing shortfall via benefit cuts.Chief among the proposed cuts is likely to be an increase in the retirement age. The so-called normalretirement age was 65 for most of Social Security’s 75-year history; today it is 66 and it will climb to67 by 2022. Many members of the commission seem predisposed to want to make it even higher.Increases in the retirement age are a direct cut in benefits – each one-year increase is a 6% to 7% cut.Increasing the retirement age to 70, as some propose, would be a 20% benefits cut on top of the 13%cut that has already occurred. This cut falls most heavily on low-income persons who are more likely toexperience serious health problems and have more limited employment options in their late 50s andearly 60s. This proposal is popular among some policymakers because the conventional wisdom is thatwe are
all 
living longer. But data shows that life expectancy for lower-income women hasactually
declined 
over the last three decades, and life expectancy among lower-income men rose justone year since 1982, as the Social Security retirement age went up one year. Moreover, longer lives donot necessarily translate to healthier lives or to available jobs for those living longer.The Fiscal Commission is a stacked deck, notwithstanding a handful of its members being strongSocial Security supporters. It has been given extraordinary – and undemocratic – powers. If the FiscalCommission reaches agreement on a proposal it will be put on a fast-track, up-or-down vote inCongress during the lame duck session – bypassing the Committee process, floor amendments and thetype of deliberation that should precede such momentous legislation. This would be unprecedented inthe history of Social Security, which has always had the benefit of regular order. If the commissionreaches substantial sup-majority agreement on a Social Security package, there is a very real chancethat Social Security will be changed dramatically in December during the lame duck session of Congress and that this change will lead to greater economic insecurity. Moreover, even if thecommission does not reach agreement, there is every likelihood that a majority recommendation from
 
the commission will go on to serve as the basis of legislative proposals to be discussed in the newCongress 
 
1. When you say "social security should not be privatized," most people understand that to meanindividual accounts and private management. But if the government (i.e. the Social Security Administration) were to gradually invest 15-20% of the SSI trust fund in the stock market, would your coalition be against it? Many countries' public pension systems invest part of the money in the stock market.
There is opposition to this idea by persons believing that government should not invest trust fund assetsin private equities. However, we like you, think that serious consideration should be given todiversifying trust fund investments and agree that this is very different than establishing “personal” or “private accounts.” Gradual and modest diversification would in all likelihood result in greater returnsto the trust funds. Also, because government would bear the risk, individuals would not be impacted by market fluctuations. 
2. I agree with the idea of not means-testing social security, but what is the coalition's position on theidea of linking benefit increases for wealthier recipients to a price index while keeping lower incomebeneficiaries' increases tied to a wage index, as they are now?
 The coalition does view “Progressive Price Indexing” as a large benefit cut, falling most heavily onyounger workers and those that follow. Over time, it would also radically alter the structure of Social Security and undermine support for Social Security as everyone would eventually receiveroughly the same low benefit. In short
There’s nothing “progressive” about the “Progressive Price Indexing” (PPI) that PresidentBush proposed and now Congressman Paul Ryan and others propose to fund their  privatization schemes. PPI drastically cuts the benefits of everyone earning over $25,000,maintaining current-law benefits only for the very lowest wage earners.
PPI proposals cut the benefits of youngest workers the most because the impact iscumulative. Under the plan proposed during the Bust privatization effort, a worker whoearned the average wage throughout his or her career and retired in 2040 would receive a benefit 24 percent lower than under the current benefit formula. If the worker retired in 2070,his or her benefit would be 43 percent lower than the benefit the worker would receive under current law.
PPI radically alters Social Security into a program where benefits are increasinglyunconnected to wages and contributions. Rather everyone eventually gets the same low benefit, unrelated to wages, similar to what welfare programs provide.
PPI raises only $3 billion in 2025, but over time it fundamentally alters the nature of SocialSecurity by undermining what the program is designed to do – provide a reasonable level of insurance protection against loss of wages.

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