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How will Privatizing Social Security affect the Latino community?

by Congressman Charlie Gonzalez

Millions of Latinos pay into Social Security all of their working lives, and as a result, Social Security has kept millions of Latinos out of poverty.  Today, 38% of elderly Latinos in this country rely on Social Security for their entire retirement income, and without this program, over half of America's Latino elderly would live under the poverty line.  Social Security is also of particular importance to the Latino community because more often than other demographics, they occupy jobs that do not offer pension coverage, have high turnover leading to periods of unemployment, have higher disability rates, and tend to live paycheck to paycheck making it nearly impossible to save for retirement. 

As the debate over Social Security reform develops, the public should know that the President's privatization proposal is not a simple adjustment to the program that will guarantee its solvency and secure the safety net.  It is a proposal that will alter the fundamental nature of Social Security forever.

We should all ask ourselves: What is the end goal of the President's privatization proposal? Is it to strengthen Social Security without altering the purpose of the program that has served millions of Americans for the past 70 years, or is the objective to eventually replace Social Security with another program?

Let's begin by remembering what Social Security is. 

Social Security is a reflection of our society's values and understanding that we are a community that ensures our elderly and disabled citizens do not live in destitute poverty.  Social Security therefore reflects the wealth we share collectively as a nation, not the sum of what individuals accumulate. 

Workers and employers contribute to Social Security during working years, and because revenues have exceeded expenditures, the excess monies go into an interest earning Trust Fund. The monies in that Trust Fund constitute the revenues available to pay Social Security recipients.

In 2018, payroll taxes alone will not be sufficient to cover payment of benefits.  However, payroll taxes plus the interest payments received by the Trust Fund from the United States government will be sufficient to cover 100% payment of benefits until at least 2042.

We do need to act soon to ensure that Social Security is guaranteed beyond 2042, but President Bush's proposal to privatize Social Security leaves many questions unanswered.  

How much control will the taxpayer have over their own private account? Will the taxpayer have the choice of financial manager and investment types? How much will financial mangers be allowed to charge for managing these accounts? What contingency plan is there should a catastrophic market loss deplete the taxpayer's private account? Will taxpayers that choose NOT to direct any portion of their payroll taxes into a private account suffer a reduction of benefits?  Are Survivor and Disabled benefits truly protected under the privatization proposal?

I don't have the answers to all of those questions yet, but what I do know is that by privatizing Social Security and allowing the stock market to dictate the size of retirees' checks, we are destroying the ability for Latinos to pay into a reliable retirement system that will guarantee them a steady income for retirement.

Instead, we should strengthen the Social Security system by making necessary adjustments from within, as we have done in the past, and we should adopt additional federal policies that promote individual savings and the creation of retirement plans as add-on supplements to Social Security.  This solution would give people the ability to build their retirement accounts without weakening the "safety net" of Social Security.

 

 This is an official Web site of the United States House of Representatives.

Congressman Charles A. Gonzalez
327 Cannon House Office Building
Washington, DC 20515-4320
Phone: (202)225-3236
Fax: (202)225-1915
Congressman Charles A. Gonzalez
B-124 Federal Building
727 East Durango
San Antonio, TX 78206-1286
Phone:  (210)472-6195
Fax:      (210)472-4009
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