February 8, 2005

Washington - Despite its record as the most effective program in U.S. history, President Bush is seeking to eliminate the guarantee of retirement security that Social Security provides and replace it with risk and instability. The president's privatization plans will weaken Social Security, not strengthen it, ending the promise that Americans will receive the benefits they worked a lifetime to earn. 

 

 Bush’s justification for privatizing Social Security is based on falsehoods.  There is no new or imminent crisis. In fact, Social Security is in the best fiscal shape in its history. Under current projections of economic and population growth made by the Congressional Budget Office, Social Security can pay full benefits until 2052. After 2052, Social Security will be able to pay approximately 80 percent of projected benefits, even if no changes are made to the program before then. While I and others will work to strengthen the long-term finances of Social Security, so that full benefits will always be paid, it is inaccurate and dishonest to claim that the program is in crisis because of a problem that's 47 years away. 

 

Even if Social Security were facing imminent shortfalls, which it is not, privatization wouldn’t solve the problem. It would make it worse. Because today’s workers pay the benefits of today’s retirees, diverting payroll taxes into privatized accounts leaves an enormous shortfall in the trust funds.

 

The American people would be forced to make up for the staggering increase in the deficit that Bush would create. There are three ways to do that: cut benefits, raise taxes or have the federal government incur the $2 trillion debt, at a time when President Bush’s economic policies have already created record deficits. Instead of creating enormous debt for future generations to pay, we should be building up budget surpluses so we can extend Social Security’s long-term solvency, as we did under President Clinton. Bush’s plan makes those long-term investments impossible.

 

Furthermore, privatizing Social Security is an inherently unstable foundation for retirement. Today, Social Security guarantees a decent, monthly benefit to all, one that increases every year with inflation, no matter how long you live, where you worked, or how savvy an investor you are. 

 

The stock market offers no such guarantees. Even those Americans who invest well could not overcome the possibility that the market could be in a slump when it’s their time to retire. Under privatization, if your investments don’t pan out, you'll be out of luck. Your benefit won’t increase every year like it currently does and, since none of us knows how long we will live, we won’t know how many years we have to make a lump sum benefit last. At a time when traditional employer-sponsored pension plans are disappearing, it’s imperative that we preserve Social Security as a guaranteed benefit without risk.

 

Social Security is not risky. It does not subject retirement security to the ups and downs of the stock market. In fact, the trust fund surpluses are invested in U.S. treasury bonds, considered to be the safest investment in the world. Those investments are currently earning an interest rate of about 6 percent. In its current form, Social Security has delivered a decent, fair benefit to all American workers for almost 70 years without fail. By doing so, it has kept 90 percent of seniors out of poverty. That’s why it's the most successful and popular program our government has ever produced. We must ensure that Social Security continues to provide a risk-free foundation for retirement.

 

President Bush should engage in an honest discussion of these issues, not one that is politically motivated or that employs fear to achieve its goals. The starting point for that discussion must be the truth: that Social Security is not in crisis today, but needs some minor adjustments for those who will retire in about 50 years. The president must accept that Social Security is remarkably successful in its current form and doesn't need a radical and risky overhaul. Most importantly, the president must pledge to preserve Social Security’s essential promise: that it will return a guaranteed, risk-free and fair benefit to everyone who pays into the system.