How will President Bush's plan to privatize Social Security impact America and the 33rd District of California?
Over 48 million people receive Social Security benefits each month. Of those, 30 million are retired workers. Social Security works, as evidenced by the fact that more than 90 percent of people aged 65 or older obtain Social Security income. I urge my colleagues and fellow Americans to not endorse a plan that will destroy Social Security. The President's Plan is irresponsible.
Social Security is an American success that safeguards our independence and economic security in old age. Americans have earned their Social Security benefits, and it would be a breach of trust to penalize people who have been paying into the system for their whole lives.
President Bush alleges that there is a crisis in the Social Security system. He wants the money currently going into Social Security to be diverted to private accounts. However, the Social Security "crisis" is not due for over 40 years, and Bush's plan makes the situation even worse for both Social Security and the national debt. Under the President's plan, Social Security would dry up in 2021 (20 years sooner than if he did nothing).
Most employers have dropped traditional pension plans. However, the President's plan penalizes almost everybody. It reduces Social Security benefits by nearly 46% for young workers, widows, children and the disabled. Suggested private accounts won't make up for the cuts in Social Security benefits; indeed the IRS would take 80 cents out of every dollar with taxes on the private account upon retirement. Unlike Social Security, private accounts don't have guaranteed annual cost of living adjustments.
Bush's plan requires $2 trillion in government debt for the first decade alone, and an additional $4.4 trillion for the following decade, often borrowing money from foreign nations. Our national debt has increased tremendously under President Bush. The President's own Economic Report says that our national debt will be higher for the next 60 years. The President refuses to raise taxes, which means a greater national debt and even more benefit cuts.
Now you might be asking yourself: What is the logic behind this plan, who will benefit? Private accounts will put nearly $1 trillion into Wall Street's pockets.
Let me give you some statistics on my constituents in the 33rd District of California and their connection to Social Security. These statistics were reported in a paper presented to me by the Committee on Government Reform Minority Staff Special Investigations Division.
The President's plan would cut benefits for over 170,000 wage earners in my district. There are 270,000 wage earners in the district who are currently contributing to Social Security. The President's plan would cut benefits for 64%—or more than 173,000—of these employees.
The President's plan would result in significant benefit cuts for individual wage earners in my district. For wage earners between the ages of 35 and 55, the average benefit cut would be $1,930 per year. For younger wage earners, the average benefit cut would be $4,485 per year. Over 43,000 wage earners in the district would face benefit cuts of over 20%.
The President's plan would cut total benefits by over $13 billion for current wage earners in my district. Over their lifetimes, wage earners in the district who are currently contributing to Social Security would lose $13.5 billion in benefits under the President's plan. More than 70% of this cut will come from the middle-class (Social Security workers who earn between $30,000 and $90,000 annually).
The President's plan could also cut benefits for widows and surviving children in my district. Social Security benefits for surviving spouses and children are tied to the benefits earned by the deceased wage earner. Because the President has yet to explain how the benefit cuts he is proposing for wage earners will affect surviving spouses and children, no precise estimate of the impacts of his proposal on surviving spouses and children is possible. But the number of survivors likely to be affected is large.