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Guest Commentary June 18, 2002
Opposing Social Security Privatization
The Honorable Maxine Waters
Social Security is the Nation's most successful antipoverty program. It has lifted over 11 million seniors out of poverty. The program has been especially important for women. Sixty percent of all Social Security recipients are women. Nearly two-thirds of all women 65 and older get half or more of their income from Social Security. Nearly one-third of those receive 90 percent or more of their income from Social Security.
Without Social Security, the poverty rate for elderly women would be more than 50 percent. It is currently about 12 percent. While this statistic is still too high, it shows how important the program is. But the President and some Members of Congress want to fundamentally change Social Security, preventing Social Security from carrying out its important role. The President and other supporters of privatization are using the program's long-term financial problems to advance their political agenda. The President suggests that by allowing individuals to divert part of their payroll taxes into private accounts, Social Security will return to firm financial footing and will still be able to continue helping recipients. However, this simply is not true. Privatization will harm Social Security, leaving the well-being of millions of people uncertain. Privatization will likely result in benefit cuts and increase the retirement age for individuals.
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In early 2001, the President announced the formation of a commission to develop a plan to strengthen Social Security. The commission's report advocated three plans, all of which would allow for some level of private accounts. What the report fails to mention, though, is that all three plans have significant drawbacks. For example, accounts would likely lose 20 to 40 percent of their value due to administrative charges and management fees. Therefore, senior citizens would have less money at retirement. I am also concerned that individuals would be exposed to significant risk under privatization. Under current law, an individual's benefits are determined by their earnings and payroll tax contributions. He or she is guaranteed a monthly benefit, adjusted for inflation, for life.
Under the President's plan, individuals would be required to play the stock market, exposing themselves to the whims of the market. A person would then have to pick the right time to retire. No matter how skilled an individual is in reading the market, he or she should not have to gamble with retirement savings. This is unfair. It leaves too much up to chance.
We are not trying to scare our senior citizens. Rather, we want to provide them with both sides of the argument. While Social Security's financial outlook needs to be made more certain, we should not rush to embrace a particular solution that may end up being worse than the current system. As Congress proceeds with this very important debate, we should be providing our seniors with facts, not lofty promises about reforms. Our seniors deserve no less.
Maxine Waters, a Democrat, represents the 35th Congressional District of California in the U.S. House of Representatives. The above commentary has been adapted a speech Rep. Waters delivered on the floor of the House, June 17, 2002. To contact her, Click Here.
The above column has been distributed by PoliticsOL.com.
