 The Social Security Debate: An Open
Letter
by Congressman Sam Farr
(2-22-05)
As you probably know, the debate over the future of
Social Security has recently been pushed to the forefront of national
policy. It is no secret that President Bush wants to drastically change
the way Social Security works by privatizing portions of the program.
I, however, am adamantly opposed to any plan that would include privatization
and I thought you would be interested in knowing why.
Privatizing Social Security Cuts Guaranteed Monthly Benefits
Plans to partially privatize Social Security would undermine retirement
security by cutting guaranteed benefits over 40% for future retirees,
even for those who don't choose an account. Risky privatization accounts
won't make up the difference. Such accounts would take nearly $5 trillion
from Social Security over 20 years, and jeopardize benefits earned by
current retirees, disabled workers and children who have lost a parent.
Today, the average monthly benefit is $950, and without this money, nearly
50% of American seniors would be living in poverty.
Social Security Faces Long-Term Challenges, but There Is No Crisis
The Social Security Trust Fund has accumulated more than $1.7 trillion
in reserves that are held in Treasury bonds. According to the Congressional
Budget Office, even if no changes are made, Social Security will be
able to pay full benefits for the next 50 years. We have time to come
up with a bipartisan solution that will strengthen the Social Security
system for generations to come
Privatizing Social Security Makes the Problem Worse
Private accounts would make the challenge to Social Security worse by
diverting nearly $5 trillion over 20 years from the system. Using this
Trust Fund money turns a long-term challenge into a much larger immediate
problem
America Would Be Forced to Borrow Nearly $5 Trillion From Foreign Countries
In order to pay for the proposed partial privatization plan, the government
would need to sell nearly $5 trillion over 20 years in new Treasury
bonds, mainly to China, Japan and other foreign countries. Adding to
our national debt hurts our economy and passes costs on to future generations.
Four Facts You Need to Know About Private Social Security Accounts
1. The plan is not voluntary:
Everyone's benefits will be cut. If you choose not to invest in a private
account, your benefits will still be cut by at least 30%.
2. 50% tax on accounts:
On average, for every dollar you have in your investment account, the
plan would deduct about 50 cents from your Social Security check.
3. Cannot pass on to children:
At retirement, you will be required to turn over most of your account
proceeds to an insurance company (or a new bureaucracy), which will
give you monthly income, leaving little or nothing to be passed on
to your children.
4. You won't control your own
money:
The money is not yours to invest as you see fit; instead, the government
will choose which funds you are allowed to invest in.
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