Social Security: What’s New; What’s Not; and, What’s Notch?
By Congressman Gregory W. Meeks (NY)
This is the first article in a three-part series on Social Security reform. It is my hope to generate a debate around Social Security reform that highlights the thoughts and the will of the residents of the 6th Congressional District.
During the presidential campaign, and long before our resources took a major detour into the military/international arena, the debate around Social Security was at an all time high. Most importantly, terms like surplus, lock box, privatization, and "Notch babies" became a part of the national jargon. I will take a look at each issue throughout the series.
Bush, the candidate, favored a plan, which allowed workers to elect a partial privatization plan. In May, Bush, the President, appointed a Commission to study Social Security Reform and in December 2001, the Commission released several reform options– each with a privatization component. In general, privatization would allow workers to divert a part ( or in some cases all) of their social security contributions away from the system to create private personal investment retirement accounts.
In keeping with the partisan nature of the Social Security reform issue, House Majority Leader Dick Armey has signaled that he will schedule consideration of HR3135. This measure, introduced by South Carolina’s Jim Demint, (and often regarded as the privatization song prelude) would guarantee full benefits for current social security enrollees. This is seen as an attempt to ward off any opposition from those beneficiaries who have already contributed and are receiving Social Security benefits. However, this move presents a serious challenge to Congress’ exclusive right to revise benefits at any time. It could also be construed as a legal challenge to the 1960 High Court ruling establishing that Social Security participants accrue no property right to benefits.
Part and parcel to the marketing debate around Social Security reform is how the privatization of the system will impact minorities. It has been frequently argued that African-Americans would benefit from a private account system because the shorter life expectancies of African Americans lessens the amount of time they have to draw on the system and thus reduces the amount of their total benefit from their original contribution.
This argument totally ignores the myriad of benefits African Americans receive from the Social Security system TODAY– including a progressive benefit, dependable monthly income, disability/survivor benefits and family insurance. Also, many widow benefits are available to surviving spouses at age 60. Should the suggested shorter life expectancy actually prove true, the current system provides a safety net for the surviving beneficiary. And, should the life expectancy argument fall through– there are over 50,000 constituent beneficiaries over 65 years on Social Security and over 10,000 receiving Supplemental Security Income in the 6th Congressional District– the current system will not fall through.
Opponents of privatization point out that to contribute income for private investments requires that you reduce your current available income.
"T‘is hardly rocket science to understand that you cannot use the same funds as both income and investment funds."
The transition time and cost to the system to implement a private investment component would mandate a reduction in guaranteed benefits and cut deeply into the solvency of the existing program. Finally, low-wage workers are more likely to spend greater periods of time outside of the workforce than those high-income workers. As a result, they would be unlikely to accumulate a comparable amount of wealth in a private account.
I repeat, Social Security is the great safety net for African Americans. Any attempt to reform the system must take into account the current benefit scheme for Americans who lack both the time and funds to make a lucrative private scheme feasible. Also, current benefits must be protected: The very features of a private account system compromises guaranteed rewards from a long work life in exchange for questionable and risky gains in the market.
Congressman Charlie Rangel (D-NY), Ranking Member of the House Ways and Means Committee, the legislative body with final jurisdiction over the Social Security reform legislation makes a compelling case against privatization and pokes gapping holes in the "shorter life expectancy" argument. Rangel asks the question:" Is privatization really the best way to address the lower life expectancy of African Americans?"
Just this week, Democratic leaders of both the House and Senate have announced that they will orchestrate full floor debates on Social Security’s future. Under Mr. Rangel’s leadership, we, as Democrats, have expressed our earnest concern about the privatization route to insure a solvent and thriving system for all retirees. We also recognize that Social Security must move into the 21st century in a responsible, reliable and compassionate way. We, as the gatekeepers of social policy, must resist the trendy fads of the moment and initiate reform that will last. There is far too much riding on this public policy initiative to leave it up to the fast and the furious: this is a job for the tried and tested.
Make no mistake about it: Any one of the current plans for privatization would be a mathematical and social nightmare. Let’s not lose sight of what the plan is and those it is designed to help. This fund provides monthly benefits to workers and their families when earnings stop or are reduced because the worker retires, dies or becomes disabled. Statistics from 1999 cite almost 75,000 beneficiaries in the 6th Congressional District, of which 45,000 are retired and in some cases rely solely on this benefit. I don’t want the responsibility of having to tell these folks that their benefit funds were wrapped up in the stock options of a failed energy corporation–hint hint.
As I develop my position on the future of Social Security and what reform scheme is feasible– if any, I want the input of my Constituents so we reflect both the times and the tradition of maintaining our quality of life in the golden years.